Has the UK Redefined What It Means to Be a High Earner?

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Welcome to the Merrin Talks Money Market Wrap, where we talk about the biggest moves in the market this week and what is driving them.

I'm Merrin Somerset-Webb, UK money editor-at-large.

And I'm John Stavik, senior reporter and author of the Money to Sell newsletter.

Today, we are bringing you a UK Budget 2026 special, though we may talk about a few other things along the way, but mostly budget. And to mark the occasion, we are joined by a friend of the show, Anna McDonald.

Anna is Investment Strategy Director at.

Hargreaves Landstand, where she oversees research across shares, funds, and wider investment trends, helping investors make sense of what's happening in the economy and markets, which amazingly is what.

We do too. Anna, great to have you back on the show.

Thank you for having me.

Right, Anna, there's been a lot of talk about the budget, a lot of talk, even though it was really remarkably boring.

What is your quick take on it?

Well, I mean, I think I'm hearing lots of takes on it. And from it's a nothing burger to people actually thinking there are a few mounting concerns about it. And I think that's really because it feels like the can has been kicked down the road. And actually what fundamentally has changed in terms of things that I think were pretty positive that went with what we really wanted to see, no increases to CGT. That was very helpful.

The cash ISA thing was, you know, we like the idea of ISAs being simple and easy to understand and not being changed the whole time. So in a way, it was a reversal, but we do know that cash ISAs are popular. And I think you'd like this stat that one in five people who open a cash ISA with us go on within six months to open a stocks and shares ISA. So perhaps it is the first step to getting people investing. And I think that the reduction in the limit had led to quite a lot of confusion and sort of a bit of worry. When it comes to the new investor incentives for stocks and shares ISAs, devil is going to be in the detail in that we are speaking to treasury about it is this the starter isa yeah the starter isa.

We don't know what that's going to be.

Yet yeah so i mean we just don't have the details yet i mean we we are involved in the early stages of discussion as with anything we want things to be simple accessible compelling all that kind of jazz so um can i just ask.

Something given that you presumably like all your competitors spent the best part of nine months or so preparing for all the anti-avoidance things that were going to affect the swap out from cash rises and then got told, presumably a couple of days ago, you didn't actually have to waste any time and money doing that. How keen are you in interacting with the Treasury again?

Well, I mean, the thing is, you are going to have prioritised things to put something in place. So we launched a money market fund last week. it's a standalone great product in itself and it has a great use. And I think for a lot of people who've always been savers, it's just that first step on the road to investing. So it's great, but definitely you prioritize things, don't you? You want to find for your clients the right ways to sort of navigate the system. And so what we, potentially we wouldn't have rush to do something like that. But we now have this product and we're happy with it. And we think actually it's quite a good option. And I think I noticed your tweet, Maren, about yesterday about cash ISIS. And actually, you know, if

people are just going to stick with their cash ISIS, with their banks, we know that The high street banks, the average rate of savings they pay, the average rate of interest they pay on savings is less than 1%.

So most people should be trying harder to get a better rate on cash outside of cash ISA.

Yeah.

And then using their ISA allowance for stocks and shares.

Yeah. So there's that. So I think, you know, I was quite pro the idea.

Of being pushed, people being pushed into... shares ISAs over cash ISAs. So I don't think that that Rachel Reeves plan was an ideal one, but I quite liked the idea. But now we've got much more complication coming forward, haven't we? Because we're now losing the LISA and we've got the first time buyer ISA, which is another thing altogether, which is remarkably similar to the LISA, but different. Because you're now not going to lose any of your own money if you withdraw it early, right? And you don't get the bonus until the end, but you can then take your own money out without a penalty.

So that's a better product.

But again, it's a change, yet another change to this regime.

And every time we see changes, we see it just has another chink in damaging investor confidence and savers confidence. So we really see that. And When, for example, we were quite pleased actually that there was not too much rumour in advance of this budget in terms of, for example, last year and the year before. In the month running up to the budget, we saw in the first year 140%, in the second year nearly 180% increases in people taking tax-free cash for their pensions because they were worried about what was going to happen. And that's something you can't reverse.

You can't just suddenly go and pay that money back in that tax wrapper has gone for you as a benefit. And so we were pleased about the lack of rumor heading into this. But as you say, Maren, the more changes, the more complexity you introduce, the harder it is for anyone to make plans. And so we would love just let's stop tinkering with ISAs. Let's have like five years of no changes to tax-free thresholds or allowances and things like that. maybe index link them if you will, but let's make it really easy and simple for people to add to their pensions, add to their ISAs. And that means that we all become less reliant in the future.

We become able to meet our needs and surely that's a good thing. Yeah.

I suppose there were lots of things that we kind of wish would have been fiddled with. And one of the things that I think we would have quite liked to see fiddled with, we would like to see a reversal or at least a a simplification of the way that IHT is going to be charged on pensions, because you know how if people are going to be paying almost ridiculous amounts of tax on pensions, their estate will be paying almost ridiculous amounts of tax on their pensions.

So we might have hoped for a reversal of that. We might have hoped for a reversal or at least a little compassion around IHT on family firms and farms we might have hoped for some reduction in the amount of fiscal drag out there john i know that you you worry about this all the time fiscal drag fiscal drag and wage compression these things.

That keep you up at night right john.

Both of these both of these things came out of this budget in a really bad way.

Yeah well i mean just unchanged really but that's the bad thing it's just it's absolutely nuts when you look at what fiscal drag has done and to be fair i think i think Normal people actually are quite aware of fiscal drag now, but because it's such a quiet thing, you still don't appreciate the extent to which it's affecting people's wages. I looked at this earlier this week, and in 2021, one in 10 nursing professionals, roughly, was a 40% taxpayer or above. Now it's one in three.

I was looking at that. You tweeted about that.

That's extraordinary.

It's absolutely bonkers. And I mean, I chose nurses because nurses are obviously, in terms of, Who is a sympathetic, relatively low-paid worker? That's the profession. But the same thing goes for, I mean, we teach our secondary school teachers has gone from one in five to almost half. And actually now more than half of police officers are 40% taxpayers as well. So, I mean, it is really quite astonishing what's happened. And again, to just be very clear, those people, it's not as if they've been given massive pay rises. All that's happened is they've been given with inflation pay rises, that have taken them into the higher tax net. So they aren't suddenly a lot better paid.

We aren't suddenly appreciating them a lot more. It's just that's what fiscal drag has done.

Well, there are some extraordinary numbers out there on this. And with the rise in the minimum wage as well, so you've seen this compression in wages that you often talk about, John. It used to be, only a decade ago, that by the time you hit the higher rate, you.

Were being paid over three times the minimum wage.

Now it's 1.8 times. And then- if that higher rate band had kept up with inflation, it would be nearly £ 100, 000. Really, would it? Gosh, that is extraordinary. £ 97, 000 or £ 98, 000, something like that. So, you know, we really have totally redefined what it means to be a high earner.

In the UK. But also, perhaps, what it means to have the minimum wage. It's actually, it's quite considerable.

Well, yeah, we've redefined low earner. It's actually basically don't exist anymore, which is, like, I mean, Some people may think that's an achievement, but if you're a 16-year-old who can't get a job and you want one and you don't actually need to get 66% in the median salary, then no, it's not very helpful at all.

No.

I think that let's go back on to the beginning of the budget conversation a little bit, actually, because I think, John, you and I were talking about this this morning. We were on Bloomberg Television talking about the budget. And one of the things that we were trying to make clear is that while we talk about all the fiddling around the edges and what you call the tapas budget on Twitter, didn't you? Oh, yes.

I liked that.

I liked the tapas budget. All the fiddling around the edges. But the background is exactly as it was. exactly as it was. We've got debt to GDP approaching 100%, we've got tax revenues coming in at about 37, heading towards 38, 39, 40% of GDP. We've got state spending coming in at 44, heading to 45% of GDP. We have a major problem with one pound in every 10 spent by the state being spent on debt interest. And every single possible solution to any of these things has been kicked into next year.

How do we pay for defense? How do we deal with welfare? How do we get this deficit really down as opposed to pretend-y down, which is we've got at the moment? All these problems remain there.

We know that.

Household disposable income by the end of this decade will have barely budged. And we have the forecast for growth next year and the year after and the year after.

Never go over 2%.

I mean, maybe they will. That would be nice.

But even if they hit 2%, this is pathetic.

I'm pathetic. So the background here remains really bad. And I did go through this.

I did go through this by trying to find things to be optimistic about. Well, there's a little bit of common sense coming in here on energy. Well, they're having a go at pretending to be nice to entrepreneurs and small businesses. But none of those things really come through. And we looked this morning, didn't we, John, at this founder's relief business, the idea that when you sell your business, you'll be able to pay 10% up to $ 10 million rather than all the normal taxes. And then you sit down, you look at what you have to do to qualify this.

And as far as I can see, nobody will ever qualify for this. Ever. Ever. Simply not possible.

But also there is that thing, don't you think, when you talk about founders that leave up to 10 million. Now, 10 million sounds like a lot of money. But when you think, is there a single founder at 10 million who's going to go, oh, yes, I've had enough now. I want to stop now. And what kind of culture have we got there? People in the US don't get out of bed for that. You know, when they talk about, they're talking about Really significant sums, not small amounts, which are very welcome. But 10 million is not it's not a game changer. That sounds awful. But this is not taking the scale ups from 10 million out to being our next listed companies of the future. I mean, that that's what we want. And we're not we're not yet

getting that, I don't think.

Yeah, I mean, your point is Mark Zuckerberg didn't sell Facebook when he was offered something like a billion for it and everyone thought it was nuts. But I think just so that nobody phones his arm and says, oh, I know she doesn't think 10 million's a lot of money. It's not a lot of money in this context. So, you know, keep your complaints to yourselves.

Yeah, sorry. I don't mean to sound sort of flippant in that at all.

No, you're not. That's the point.

But I'm just saying we need ambition for those people. Actually, what we're still missing, I think we've got good VCT and good EIS culture, all that kind of thing. But what we're still missing is that extra leg that takes those companies and moves them up to the next level and doesn't get them bought by overseas investors. So do you think the answer to why it is a kick the can down the road budget is because there maybe is another big political event happening in the shorter term?

I think there's quite a lot going on here.

I mean, you could, if you were being generous, you could say, look, they've got a lot of investigations going on here. They're looking at welfare. They're looking at defense. They're trying to figure stuff out. Burnham hasn't been in place that long, although one would have thought he'd been thinking about it in advance.

But, you know, whatever. No one seems to think in advance in politics anymore.

So you could say that. And there's a spending review coming and we'll get some proper stuff then.

You could say that. But I think probably we all suspect there's an election coming, don't we?

Yeah.

I'd be interested to get your take on this, Anna, because I can totally see the argument and I think I'm basically on the side of an early election. But I am also wondering what happens, because if he says we're going to have an election so that I can raise taxes, how do you sell the story?

Well, I don't know how they sell the story. And I was thinking about Brenda from Bristol who said, oh, not another one. Do you remember that?

You're joking, Anna.

Not another one? Oh, for God's sake, I can't, honestly, I can't stand this.

But I do think internally it's probably an easier sell because I saw a John Curtis presentation at the Conservative Party conference and it was quite sobering, I think, for the Conservatives in the room there because whilst it does feel like we're getting back to two-party politics... The Green vote has really diminished. Labour is ahead in the polls.

And the Conservatives' vote has been fragmented by the reform. And even if reform aren't polling what they were, they're still taking enough of that vote away from the Conservatives that the Prime Minister and others might feel quite confident about going into that election. And we may either have some kind of resolution in the Middle East and some kind of oil price fall, or simply we start lapping those comparatives. And that means that things start to feel a bit better. And perhaps actually you don't need to go for such a big tax and spend. You just want to get yourself in for another five-year term so you can put your 10-year plan into action. And remember, whilst our yield's so the return that investors are asking

on our bonds is quite high and it's still higher than our European neighbours. Since we last had the potential ideas of some kind of resolution in the Middle East, it's say in July, our bond yields have gone up an awful lot less than our neighbours in France and others in Europe and in the US. So I think there potentially is a small amount of credit being given to things like triple lock to double lock which doesn't make a huge difference by 2030 but by the end of 2030s is 25 billion by the end of 2040s is 50 billion per year this does make a difference it does start to compound and maybe maybe we are seen as slightly less politically risky than some other countries at the moment and and a small amount you know

little incremental bits and start getting into a kind of virtuous circle around borrowing costs instead of a vicious circle would be a very, very happy place to be.

Not entirely convinced.

I'm trying to be positive, Mary. Yeah, no, good work. Good work. Good work.

There were a few bits and bobs in the budget that haven't really been discussed that much. And one of the things that I thought was quite interesting and we haven't really got to the bottom of yet is how often people who pay their taxes via self-assessment are going to be asked to pay, you know, the moments you pay twice a year and you kind of top up.

And there is a suggestion that you'll now have to pay quarterly or monthly, which I think will be an enormous strain on small businesses. And that one of the things that John, you and I have talked about before is the way that politicians tend not to understand how income works in the real world, in the private economy, the way that our incomes go through life cycles instead of being constant forever. And that is also the case, of course, for freelancers, for small businesses, for sole traders, you see very, very lumpy income over a year. So if you're then asked, to pay monthly, that's going to have an unpleasant cash flow effect, particularly at the beginning for some businesses. And we know that the government is

anticipating raising quite a lot of money from other people's cash flow difficulties. I think they've put in 1.3 billion for it. That seems to me the kind of little thing that can be quite easily overlooked, but might cause quite a lot of people some trouble.

No, I mean, I agree. I was looking at this this morning as an example of some more complexity that they've just whacked in. And effectively what you're doing is you're taking a very illiquid institution like HMRC and a load of illiquid institutions like small businesses and you're demanding that they take all the cash flow risk all of a sudden. And I just think that that's actually a really... Yeah, I think you're absolutely right. So it's not then a budget.

For beauticians and the white men?

No, it isn't at all. You're right. It really isn't.

Not the ones that are paying their taxes.

And I think that the number of tax changes from this budget has been counted up to be 50. And that adds to a further 50, I think, since the previous chancellor started.

And I think.

What happens is that legislation comes on top of further legislation or these kind of changes, and someone forgets to take away the legislation that no longer should apply. And therefore, actually, it becomes quite difficult as a small business owner or as a private individual. If you're not making a huge amount of money, you can't afford the expense of tax advice.

And the tax advice gets ever more cumbersome and more convoluted with each passing legislative change. And that makes it just... it doesn't benefit the beautician or the white band man who just has more and more to navigate each time.

Yeah, and this is nothing to MPs because P-A-Y-E, flat incomes. Anyway, the other thing that we should probably mention is the extra two percentage points on saving income and on rental income. Now, the extra two percentage points on saving income, that's added to the two percentage points that were added, what, last year, Jonathan?

Well, yeah, they were added. Basically, it's all going up by four percentage points in April. It was headlined by Rachel.

Yeah. So that's something that, again, we were talking about this earlier, something that might push people into buying gilts instead of having deposit accounts, which is old-fashioned financial repression. Or maybe it'll push people, Anna, into some of your products.

We have a lot of gilt buyers at the moment.

I bet. I bet.

They are buying those low-coupon gilts. As you know, they don't have capital gains tax to pay on them. And we've got some who, there was a big expiry last week, and about half of them have gone back into the January 2028. But some are going really quite um adventurous and going out to 2056 2061 that's not the same.

Thing i know god that's yeah.

But um yeah some of them are quite some of them are quite adventurous but most of them are going for the shorter dated lower.

Coupon i've been doing the very shorter dated ones yeah like the january 28th that's yeah yes We know that from our special gold-plated Merin line on the Hargreaves Lansdowne platform.

And so, yes, I mean, again, this whole increase in the savings rate for a higher rate taxpayer, I mean, it's really quite considerable tax that you're paying.

Yeah, nearly 50%.

49%.

Nuts. And so that is tricky. And again, it's back to those manifesto commitments they got themselves stuck into about raising taxes for working people.

Now, the other one, of course, is buy-to-let investors. I mean, this is just over, isn't it? It's done. It's done.

I mean, who would get into that business now? And then, of course, even though we have said that that may lead to higher rents in future, because what are you going to do if you're paying 50% on your income? from your buy to let, you're going to put rents up, aren't you?

And also we know that the OBR have also put in about how much house building in itself has been hit.

So an ever.

Shrinking supply of properties to let or properties to buy or that exist is going to lead to more and more issues around pricing, whether you're a renter or a buyer.

No, of course, we now also have effective rent control. So maybe rents won't go up that much, you know, but certainly supply will come down.

Well, that was interesting about your first home project. thing as well. All the house builders kind of cratered about halfway through the budget when they realised that the structure's not the same as help to buy, which was basically help to pay your chief executive's bonus. And that's not actually the case for this. It's much more expensive for them to take part. And while on the one hand, I'm kind of like, well, that's a good thing. On the other hand, it's kind of like, well, it also means that nothing's probably going to come of it.

How does this one work, John?

What's the difference?

Well, basically, as I understand, I haven't looked into it in detail, but the more houses that you sell as a house builder through this, the more of a kind of essentially commission you have to give to the government to be part of the scheme. And as far as I'm aware, the conditions on this one are more expensive than the last time. I would need to look into that a little properly.

It's an equity stake, not a loan, right?

You come in with your 2.5% deposit and then you can get the government to effectively... buy pot for you as an equity stake?

That's the same law as the last one. Because then, yeah, when you buy the government out, you have to pay them whatever the valuation is of the property. And that's one of the problems with original help to buy schemes now that people are trying to sell and the prices of flats have gone down. Some of them find that the valuations only last for three months at a time.

And if you end up selling it for less than the valuation, you still have to pay the government stake according to what the valuation was. So basically, if you get or something like that, you're still in a hole for whatever it was the government whatever it is you owe them, according to what the price should have been.

Yeah.

But even so, the government is going to end up losing money, right? I remember we said this right back at the beginning, it helped to buy, John. Everyone said, well, you know, price go up forever. We can't lose as a government.

But actually, well, hello.

Oh, yeah.

I mean, yeah.

No, you can lose. Yeah. And the problem is the sort of stuff that's been bought via helped to buy is generally kind of flat.

Yeah. Well, it had to be. I mean, it had to be new build, right? And it's new build that has lost the most value in this list. which we call it correction so far.

Yeah, aye. I can't remember, I was looking at the stats, but it was something like half of them that had been sold so far had sold for less than the price they were bought for. And that was like, you know, going back, it started about 10 years ago, didn't it?

Yeah.

But almost all of the ones that had been bought in the 2020s had been sold at a loss. It was quite striking.

Miseries, miseries. Anna, is there anything else that we should talk about in the budget? Anything else that you found interesting?

Well, it was in the Red Book.

So to be.

Discovered afterwards was that something quite encouraging, maybe. which is stamp duty on shares is going to be replaced by a securities transfer tax from 2027. And the best line in it, I think, is the government recognises the potential economic benefits of cutting stamp taxes on shares. And we'll keep this under review. Now, I know you guys are signed up to this idea, too. We have on the platform, we've got over 200 billion pounds it may stun you to know that over 20% of that is in direct UK shares and investment trusts. So, I think our clients are plenty invested enough in the UK. What we need to do is to attract international investment. And I think if we get rid of stamp duty, that does start

to level the playing field because why does someone want to spend 0.5% buying a share in in, I don't know, Tesco when they don't have to pay anything if they're buying a share in Tesla or, you know, it's just, I think the UK, our UK domestic investors are there actually. I think retail investors are pretty strongly there and what we really need to do is encourage pension funds to invest more and we need to encourage international capital here and let's just level the playing field. So I think there would be, we're seeing company after company leaving the UK market at the moment and, We don't want that to happen. That's also very poor for tax revenue raising for the government. And so I think that would be

that would be great. And I really hope that that consideration continues and that they do take that away. So we continue to campaign for that because, I mean, obviously, our clients would like it to not have to pay a transaction tax. But as with anything, transaction taxes just clog the wheels.

I mean, I'm just absolutely amazed that no recent government has done this already. There's been so much campaigning for it. There are more than enough academic studies showing how painful it is for the UK market to have this tax. And, you know, I wrote about it a few years ago, maybe five or six years ago. I wrote a column about it on duty, which I really thought international investors would find kind of niche or uninteresting.

And I was amazed.

By how many emails I got, particularly from America, saying, yeah, that's why we don't buy UK shares. Why would we pay half a percent on every trade?

And if you're a high-frequency trader, why would you do it? I mean, that actually really does add up to doing quite a lot of tax.

Yeah.

Yeah, so that was that. No, I agree with you, Anna. That would be great.

So far, a change of name isn't quite enough. We'd like to see actually an actual change. An actual change is what we'd like.

But at least the comment is in there, the recognition.

Yeah, that's good.

Which is something, I think.

Yeah, you know, that was one of the positives that I took out of this budget, my desperate attempt to find a positive, was that quite a lot of problems, while they haven't been solved or indeed even addressed, they have been recognised. And this is the beginning. Yeah, exactly. John, was there anything else that you saw that we should talk about?

We've got a new marginal tax rate, 53% for state pensioners. It's my favourite. We get to add a new cliff edge. Maybe that should be a goal for chancellors, add a new cliff edge every single year.

Don't encourage them.

Tell us how that works, John.

Tell the pensioners in the audience.

How's the tax rate going to work for them?

Well, look, I do have to be one of the people who is solely dependent on the state pension. And it's going up above the tax threshold next year because the personal allowance is £ 12, 570 and the state pension is going up to £ 13, 036. So to avoid nasty headlines in the papers... the Chancellor promised to make sure that anyone who is only reliant on the state pension will not pay any tax. And so in order to accommodate this, we have this elaborate kind of like taper, which is exactly like the one at the £ 100, 000 mark, where you get £ 1 taken away from your personal allowance for every £ 2, except this one is a tiny little extra allowance. And then you get £ 1 taken away for every £ 3 you're

over it. So if you earn something like £ 13, 360, you will no longer get this. So there's a 53% marginal tax rate between about £ 13, 036 and £ 13, 300 and something pounds. Oh my goodness.

There we go.

Excellent. I mean, it's interesting, isn't it?

Your granny's paying 53% marginal tax.

That's appalling. It's more than you're paying on your savings, John. Exactly.

It's like one rule for the rich, one rule for your working class.

So, John, I like your point that it's possible that chancellors play this game with each other that, you know, every new chancellor thinks, well, what cliffhanger can I put in place? Someone's done a 58, 62, 74. What can I get in here? But, for everybody else, every economist, every analyst, every journalist, we all agree that tax simplification is the answer to everything. But all chancellors clearly completely disagree.

They think that tax complication is the answer to all their problems. It's unresolvable, isn't it?

I guess it's the same story as rent controls, isn't it? It's basically politics versus economics. What's popular in one is completely wrongheaded in the other. And I don't actually know how you reconcile that, but that's why we're... I mean, fundamentally, that's why we're in the hole that we're in.

OK.

LAUGHTER So all the exciting stuff comes next year, I think, is where we agree. Next year, they've got to come up with some actual plans for welfare, some actual plans for defence, and maybe even an election.

Something to look forward to. Excellent. Okay.

Now, moving on, moving on, away from all that, what we can look forward to for the rest of this year is the anthropic IPO. Excited, John?

I am very excited about this, actually.

Yeah.

Mainly because it gave me a kind of reason to actually look at AI and try and figure out how all the pieces bolt together. And actually, I still don't particularly know, but at least I can explain that Anthropic is basically like a sandwich maker, except it takes microchips and then turns them into clod and then sells clod.

Poor clod.

And then that's how you have to think about it. And then if you do want to sit down and value it yourself, at least you have a rough idea where all the moving parts are. If they can make the cost of making the sandwich lower than the money they make from selling the sandwich, then that's them.

They're sorted. But the cost is very, very high.

The cost is very, very high.

It's as if they're making an awful lot of sandwiches at the same time and then hoping that.

And nobody wants to buy them. Everyone wants them for free, right?

Everyone wants the sandwich for free. And if they are going to pay for the sandwich, they're only going to pay for a tiny bit of it.

You see, I mean, this is one place where I do... wonder because maybe this is because at first you look and you think is there a moat here and you think well no because there's there's kind of you know open source ai and all the rest of it but if you get in there first and you get companies to start using it and you know lots of people clearly do swear by claude because i see people talking about it all the time yeah particularly the kind of techie people but no yeah i mean these are people they may not be paying enough i think that's fair But presumably on the other side, the kind of cost side, if you can squash down basically the amount of compute you need to use to create a half-decent AI production unit,

then that's what... I mean, again, I think you can be sceptical about this either way, but I'm trying to recognise that I also didn't buy the Google IPO and that was probably the biggest investment mistake ever. I've made of many, obviously.

Obviously, we've all been reading about Anthropic, we've all been looking at the risks, all been thinking about it, etc. Now, my favorite bit in the whole thing is the idea from the Anthropic founders that we shouldn't look at investing in the shares in purely transactional terms. Now, I think that we should look at buying them in only transactional terms.

And it seems to me that when we've got to the point in a cycle when people start telling us that we should be investing not on the basis of businesses, however good they are, and numbers and valuations, but on something a bit more woo-woo, I.

Start to worry.

I mean, I absolutely agree. Obviously, Anthropic has got that kind of slightly hippie element to it and it's always hard to work out how much of that is kind of cynical hype and how much of it is earnest belief and I think it's probably about 50-50 but yeah I mean whenever you're being asked to take all these things on faith but there's so many kind of top of the market signals for we've had them all this year there's been stuff coming along.

This moves us neatly neatly to Alphabet and to Google And the NASDAQ as a whole is off 4.5%, 5% since the beginning of the month. So there's quite a lot going on here. Anna, have you been looking at Google Alphabet now and see what's happened to that?

Yeah.

I mean, it just shows you, I think, that the investors are feeling a bit nervous and it doesn't take many cracks in a business to be punished by the stock market. So the shares are down more than double digit. And Where we are seeing huge growth is still in cloud. I mean, it's over 100% growth. That's pretty strong. But the core of the business is still search. And that was a bit weaker than people looked for.

But really, just a tiny bit weaker, right? I mean, it's really not much.

But I think in an environment where not long ago, they did quite a big equity raise, didn't they? So you've got potentially, you've just got that nervousness that's coming through saying, Well, I mean, the whole point about these, if you remember back in the halcyon days, a couple of years ago, that these guys could really afford to invest in AI because they were just cash flow machines.

A lot of them are going cash flow negative. And if the core parts of the business, no matter how great they are, just seem to be crumbling a little bit, what does that say about the security of that long-term investment? So I think that I mean, Alphabet has got a lot of strings to it, but strings to its bow.

And it's got the TPUs that it can now sell. It's got huge growth in the cloud. But it's just, it shows you wobbles around the business, wobbles that investors really take quite seriously, which is those engines that were driving the growth. They're not, if they seem to be floundering a little bit, I wouldn't be surprised investors take pause for breath on that.

And are your investors taking pause? And when you look at your most bought, most sold, etc., are people still going into tech, still going into America, or are they moving into things slightly more defensively?

We still have investors buying low-cost ways into the market, very diversified trackers, global trackers. And actually, if you think about it, the UK market has been a wonderful counterfoil to that, the sort of non-AI trade, which is running neck and neck with the S & P this year. FTSE has done just as well. So, maybe not on share price terms, if you add in that dividend. So it's been a lovely little counter to that. So we've still got investors buying low-cost exposure to that. And just to let you know, on SpaceX, we were, I would like to say, the number one place for IPOs this year for Hargreaves Lansdowne. We had a lot of retail investors going in. They're doing their first ever share trades

in SpaceX. And we spent a lot of time talking about, this should be a small part of your portfolio. This is for the long term. And, you know, nearly 80% of those buyers are still holding on to those shares. So I think that actually shows that sometimes that messaging is getting through. So we're seeing big, you know, diversified plays.

We're seeing lots of gilt buying, as I said. And we are still seeing some UK shares are still very popular. But also they like the tech trade. And SpaceX, for example, is a good example of that. Yeah.

I've still got my SpaceX shares. I'm trying to make enough money for them to take John out to a drink.

But John's very expensive.

John's very expensive. We know that. And I only got a very small allocation, so I've got to hang on a bit longer, I really hope.

I'm glad you said I'm expensive, at least.

That's good. We can get out of bed for less than £ 10 million a day, will you, John?

Exactly.

Everyone knows that. On that happy note, thank you both very much for joining us today. Thanks for listening to this week's Merrin Talks Money Markets Wrap. If you like our show, rate, review and subscribe wherever you listen to your podcasts. Also be sure to follow me and John on X or Twitter. I'm at Merrin SW and John is John underscore Stepak. This episode was produced by Sam Asadi and Moses Andam. Questions and comments on this show and all our shows are always welcome. Our show email is merrinmoney at bloomberg.net.

Special thanks to Anna MacDonald.

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