As the new year dawns, a leading financial expert is urging Britons to brace themselves for another period of significant monetary shifts. Following a turbulent 2025 marked by market uncertainty from Donald Trump's tariffs, a transformative Budget, and a Bank of England base rate cut to its lowest point since February 2023, the forecast for 2026 suggests no let-up in financial upheaval.
Consumers Take Control as Cost-Cutting Becomes Paramount
According to Antonia Medlicott, Founder and Managing Director of financial education firm Investing Insiders, the coming year will see a major behavioural shift. "As ordinary tax-payers and consumers, it’s easy to feel powerless about much of what determines our wealth," she states, highlighting external factors like income tax, interest rates, and inflation.
Medlicott believes that against a backdrop of rising unemployment and stubbornly high inflation, 2026 will be the year people "wrestle back some control." The primary focus will be on actively lowering living costs. She advises that savvy shopping, relentless use of online price comparison tools, and a willingness to ditch brand loyalty will be essential. "Be ready to switch often and try unfamiliar names," she warns, noting this applies to insurance, utilities, ISAs, and pensions to avoid overpaying.
Investor Anxiety and the Potential AI Bubble Burst
One of the most striking predictions concerns the technology market. Medlicott issues a stark warning about the artificial intelligence sector, suggesting the "AI bubble will burst" and potentially trigger a crash in over-priced US tech stocks, which could cause chaos for UK pensions and investments.
However, she acknowledges the uncertainty, stating that perfectly timing such a market event is often down to luck. What she is sure of is that "anxiety about a potential crash will shape investor behaviour in 2026." She observes DIY investors already building up cash reserves, retreating to perceived safety. This emotion-driven behaviour, she cautions, can itself fuel market volatility.
Her key advice for the year is to understand behavioural finance—how emotions like fear and overconfidence lead to poor decisions, such as panic-selling during downturns. Having a plan to manage these emotions could be crucial when markets reach boiling point.
Spotlight Intensifies on Stocks and Shares ISAs
A major policy change will also direct attention towards investment vehicles. Following Chancellor Rachel Reeves's November Budget move to slash the annual Cash ISA allowance to just £12,000 for those under 66, Medlicott predicts a government drive to encourage more people into investing.
While she supports greater financial education, she understands the fear new investors face. "People will need help understanding when investing can be a better option than a savings account, as well as when it is not," she says. Although the new limit doesn't take effect until April 2027, she urges against delaying the conversation, especially as the government has ruled out workarounds like shifting funds from Stocks and Shares ISAs into Cash ISAs.
Medlicott seeks to demystify investing, emphasising that not all investing is equally risky and that new, simple products exist for beginners. She also highlights the often-overlooked risk of cash savings losing value to inflation. "Start with the basics," she concludes. "Investing is not about betting your life savings on ‘hot stocks’; it’s about making smart decisions for long-term growth."
