The Chancellor’s Spring Statement did not make for easy listening last week.

Rishi Sunak’s announcements on the raising of the National Insurance threshold by £3,000 and the 5p a litre cut in fuel duty were welcome.

Likewise, the promise that he would reduce the basic rate of income tax from 20p to 19p in 2024 struck a positive note, albeit a rather political one.

However, the small amount of wriggle room that the Chancellor has for giveaways to help ease the growing cost of living crisis was overshadowed by the ever-deepening concerns surrounding the rising rate of inflation.

Currently standing at 6.2%, the Office for Budget Responsibility (OBR) is now forecasting that inflation will average 7.4% this year.

Alongside this, the OBR is suggesting that while the economy will grow by 3.8% this year, GDP will only grow by 1.8%, 2.1% and 1.8% over the following three years.

Further concern came with the news that debt service costs would rise to £83bn in the next fiscal year, the highest level on record.

When it comes to the issue of inflation, there is very little the Chancellor can do to resolve this directly.

We are in the midst of a global supply chain crisis the like of which we have not seen for decades.

There is an expectation in some quarters that after the 2008 global recession and the Covid-19 pandemic that governments will keep throwing money at the problems, but this is simply unsustainable.

The reality is that the various economic challenges, led by the rising inflationary pressures, mean that the financial markets will remain volatile in the short to medium term.

They are recalibrating and trying to work out what the economic headwinds mean for the value of businesses.

Volatility does, of course, also provide opportunities where stocks are mispriced.

While we continue to monitor what is going on in the UK and global financial markets, and advise you accordingly, our focus remains steadfast in ensuring that our clients’ portfolios have a longer term, diversified and balanced approach.