Five years on from the start of the 2020s, it’s time to take stock and look forward.

Think back to 1 January 2020. Boris Johnson had become prime minister with a majority of 80 seats. Covid-19 was still a month away from being declared an international public health emergency. The Bank of England Bank Rate was just 0.75%.

As 2025 approaches, the picture is radically different. While today Covid-19 is of little concern, its economic consequences remain. As the pandemic took hold, the Bank of England was prompted to cut rates to 0.1% in March 2020. However, from December 2021 rates started to climb, reaching 5.25% before reversing direction in 2024 to their current 4.75%.

Cumulative inflation, higher interest rates and a return to a Labour government have created a new financial landscape, meaning your financial plans may need adjustment.

Impact of inflation

A pandemic-induced inflationary surge saw UK inflation peak at 11.1% in October 2022, a 41-year high, but it is now back to around January 2020’s 1.8%. Inflation’s return to a norm of around 2% is no solace for most people, who feel price rises over longer periods than the 12 months favoured by economists. In the UK prices will have risen by around a quarter in the first half of the decade.

Cumulative inflation, higher interest rates and a return to a Labour government mean the backdrop for the second half of the 2020s is substantially different. Have your financial plans taken account of the new landscape? For example, the 2020s’ wedge of inflation means the funds you need for a comfortable retirement are correspondingly higher. At the same time, higher interest rates and a harsher tax environment could require a reassessment of your investment approach.

This halfway point is a good time to pause, review and prepare for whatever the next five years might bring.