…February 2026

Money may well make the world go around but what happens if you don’t have any money, or you fear that tax rises and inflation will wipe out whatever surplus you do have? This is the question that many British people have been asking themselves for several months now. 

Unfortunately there are no answers from the government with the most recent figures showing that the British economy grew by just 0.1 percent in the last quarter of 2025. Even this was driven by manufacturing with no growth in the services sector that normally accounts for some 80 percent of Britain’s economic output. This contrasts with the overall growth of 1.3 percent for the year as a whole, itself an improvement on the 1.1 percent growth from 2024 but less than the 1.4 percent that was forecast. According to the British Chambers Of Commerce, surveys have shown that increases in taxes and inflation are now the main concern for most business leaders. 

The Bank of England opted to hold interest rates at 3.75 percent but forecast that there would be some further reductions in rates later in the year. However, the Bank also forecast lower economic growth for this year of 0.9 percent, down from the previous forecast of 1.2 percent, combined with unemployment which has just risen from 5 percent to 5.2 percent. This last, coupled with an expected drop in inflation in the Spring would make further interest rate cuts more likely.

Across the Atlantic, the US jobs market grew slightly in January after last year’s sharp slowdown. This has bolstered the Federal Reserve’s position in holding firm on interest rates despite pressure from the US president Donald Trump to cut rates. Nonetheless, there is some evidence that US inflation is falling with many analysts predicting an interest rate cut in June. However, wage growth was sluggish and retail sales were flat at the end of the year as the US tariffs have pushed up some prices to consumers. Research from the US Federal Reserve found that the majority of tariff costs – up to 94 percent – were passed on to American customers in 2025.

Meanwhile, the Eurozone reported imports and exports both increasing, leading to a €164.6 billion trade surplus for the year, slightly down from the €168.9 billion of 2024, despite the huge shocks to international trade from the Trump tariffs. However, some sectors such as machineries and vehicles did decline while others such as energy rose. 

In response, EU leaders have discussed how to cut bureaucracy to simplify business and improve the bloc’s overall competitiveness. The EU has also discussed greater use of the enhanced cooperation mechanism – essentially the majority of nations pushing ahead rather than waiting for unanimous agreement. This depends on the major economies, such as France and Germany coming together to drive strategy and prevent troublemakers such as Hungary from paralysing EU policy. This approach has been used to offer help to Ukraine but is now also behind economic policies around issues such as favouring EU-based companies for official business.

In reality, the economic strategy for both the UK and the EU is increasingly being driven by the need for greater spending on defence. Britain is considering accelerating its defence spending to reach the 3 percent of Gross Domestic Product target much sooner than planned. Naturally there’s no word as to how this will be funded but the recent budget already stretched the mix of tax rises and service cuts almost to breaking point and there’s still little sign of the mythical ‘growth’ that will fund everything.

“We are not the Britain of the Brexit years anymore.”

Keir Starmer

At the same time, the British government is becoming more outspoken about its support for Europe, with Starmer telling the recent Munich Security Conference: “We are not the Britain of the Brexit years anymore.” That’s because both the UK and the EU recognise that they need each other for economic and defence reasons now that they can no longer rely on US support. 

The EU is mostly seen as an economic grouping, which is how it started, but its  founding treaties also include a mutual defence clause, which mirrors NATO’s article 5, with all the EU 27 countries having a duty to defend any member that is attacked. Ursula von der Leyen, the head of the European Commission, told the MSC: “I believe the time has come to bring Europe’s mutual defence clause to life.” 

She highlighted the need to work with close partners, including the UK, Norway, Iceland and Canada, adding: “We want to increase our offer to many of these vital partners. This means, in this acutely volatile time, Europe and in particular the UK should come closer together – on security, on economy or on defending our democracies.”

These days defence is not just about hard military might but also soft political and social forces, especially given the stated US policy to undermine the social fabric of the European democracies and install hard right governments. So von der Leyen went on to make it clear that Europe would also defend itself against the demands of the mainly US tech companies through tighter regulation, noting: “Our digital sovereignty is our digital sovereignty.”

This is already starting to bite. In France, the Paris prosecutor’s cyber crime unit raided the X offices and summoned the X owner Elon Musk and former CEO Linda Yaccarino to hearings in April. This followed an investigation into how the X algorithm recommends content to users, which was then widened to include data protection, infringement of image rights and distribution of child sexual abuse material. And in the UK the Information Commissioner’s Office is investigating Musk’s Grok AI chatbot after it was found to generate highly sexualised images of people, including children.

Nor is this limited to European countries. Australia has already implemented a ban on social media access for under 16 year olds. And India is also looking at social media, having just amended its 2021 Information Technology legislation to require social media platforms to detect and label deepfakes. Some content, including non-consensual sexual imagery, is banned outright, with the platforms having to remove illegal AI-generated content within three hours of a takedown notice.

Naturally the mainly American tech moguls have pushed back against this regulation, accusing the various governments of stifling free speech. But their case has been weakened by the continuing revelations around the American paedophile Jeffrey Epstein. At its heart this scandal is about the trafficking of women and girls but it has now widened to offer a glimpse of how the rich and powerful – mostly men – operate. It’s not a pretty picture but it has drawn in various people from politicians to business men across many countries. 

This includes the suggestion that the former prince, Andrew Mountbatten-Windsor, provided confidential government briefing documents from his time as a trade envoy to Epstein and his associates. And it’s possible that Britain’s former US ambassador, Peter Mandelson, may have leaked cabinet secrets to Epstein, including sensitive financial market data. British police are currently assessing if either of these cases amount to misconduct in public office.

It follows from this, that if we assume that the answer to the money question for Britain and most European nations is to rethink how they approach taxation, then perhaps starting with the ultra rich might not be a bad idea?