Weekly Briefing: UK SME Boost, Trumps Crypto Push & BoE Rate-Cut Concerns

Read on for an in-depth look at this week’s major developments: from a new government push to boost SME participation in defence, to Trump’s strategic crypto reserve announcement, robust activity in the housing market, and growing concerns over further rate cuts by the Bank of England. 

In one way or another, all of this week’s developing stories are playing their role in reshaping our economic and investing landscape.

Global Investments

Trump’s Crypto Reserve: The start of a new chapter for digital currencies? 

• U.S. President Donald Trump announced on Truth Social that five digital assets—Bitcoin, Ether, XRP, Solana, and Cardano—will form a new U.S. strategic reserve of cryptocurrencies.
  
  
• Trump's move has spiked market values, with Bitcoin rising over 11% to $94,164 and Ether climbing around 13% to $2,516, fueling a broader market rally that boosted the total crypto market by over $300 billion. However, this large movement quickly retracted as the broader market had a seemingly red day. 
  
  
• Federico Brokate of 21Shares commented that Trump’s move “signals a shift toward active participation in the crypto economy by the U.S. government, potentially accelerating institutional adoption and strengthening digital asset innovation."
  
  
• Analysts remain divided on the long-term impact, with some suggesting that the reserve could be structured through the Treasury’s Exchange Stabilisation Fund. In contrast, others see it as a politically motivated signal to the industry ahead of upcoming policy debates.
  
  
• Interestingly, China is reportedly ramping up efforts to establish a strategic Bitcoin reserve as part of its broader de-dollarisation initiatives, aiming to reduce reliance on the US dollar amid evolving global crypto regulations—though details remain unconfirmed.

UK Economy

New defence spending targets to unlock support opportunities for SMEs

• In a bid to ensure more British small businesses benefit from the government’s historic uplift in defence spending to 2.5% of GDP, a new support hub is being launched to guide SMEs into the defence supply chain.
  
  
• The initiative will set direct SME spending targets for the Ministry of Defence by June, aiming to unlock up to 12,000 SMEs across the UK and boost job creation in small towns and suburbs.
  
  
• With nearly 70% of defence spending already going to businesses outside London and the South East, the move is designed to reverse the trend where only 4% of spending reached SMEs in 2023-2024.
  
  
• Prime Minister Keir Starmer emphasised, "Increasing our investment in defence is not only bolstering our national security, it is an opportunity to put more money into working people’s pockets and boost economic growth."
  
  
• Defence Secretary John Healey added, "Today’s announcement will ensure that smaller firms benefit from increased defence spending, attracting new suppliers and fast-tracking the technologies of the future into the hands of our Armed Forces."
  

Resilient Housing Market Amid Stamp Duty Changes

• UK house prices showed resilience in February, rising by 0.4% month-on-month to an average of £270,493, outpacing forecasts and marking a 3.9% annual increase.
  
  
• Lender Nationwide noted that buyers were eager to complete transactions ahead of upcoming stamp duty changes—first-time buyers, for instance, will face a lower threshold starting April—to avoid additional costs.
  
  
• Despite subdued overall economic growth and recent chancellor-led tax rises, real wages are rising and mortgage rates remain below their 2023 peak, supporting steady housing demand.
  
  
• Robert Gardner, Nationwide’s chief economist, observed a 14% jump in total housing transactions in the second half of 2024 compared to the same period in 2023, even as the market braces for short-term volatility post-April.
  
  
• "Housing market activity remains resilient, driven by buyer urgency and supportive wage growth, despite looming tax changes and fluctuating mortgage rates," noted economist Matt Swannell of EY ITEM Club.
  
  

BoE Rate-Cut Caution: Inflation Fears and Wage Pressures Linger

• The Bank of England’s rate-cutting spree faces fresh scrutiny as concerns mount over the recent rise in inflation. While Governor Andrew Bailey reassures that current factors—primarily energy costs—are temporary, former officials warn of deeper underlying issues.
  
  
• Inflation unexpectedly hit 3% in January, and experts like former MPC member Martin Weale and former rate-setter DeAnne Julius have raised alarms about upward pressures from rising employment costs and service prices.
  
  
• Deutsche Bank now forecasts that inflation could climb to 4.25% by summer, prompting caution against further rate cuts, with Chief UK economist Sanjay Raja advising that any reductions might have to be more “backloaded than frontloaded.”
  
  
• "If this trend continues, I’d be nervous about making further cuts; the risk is that we repeat the post-pandemic inflation nightmare," cautioned Weale, highlighting the possibility of another rate cut triggering a further wage-price inflation spiral.
  
  

Final Note

From strategic moves to boost SME participation in defence and bold steps in the digital assets realm, this week's stories showcase diverse growth opportunities both domestically and globally. 

With assets like Bitcoin gaining momentum through increasing public and official government backing, it will be intriguing to see how these trends evolve in the coming months, and the impact this will continue to have on portfolio constitution. 

Meanwhile, the Bank of England faces a pivotal decision on March 20th as it strives to balance the need for growth against persistent inflation—a challenge that will test its resolve. 

Whether you’re a UK investor, business owner or simply a curious spectator across
s the fiscal landscape, we'll strive to keep you updated as these stories unfold and do our utmost to offer the insights needed to navigate this ever-changing environment.