British savers and investors need to prepare for a higher-for-longer UK interest rate environment to protect and grow wealth, warns the CEO of one of the world’s largest independent financial advisory organisations.
The warning from deVere Group’s Nigel Green comes as the Bank of England keeps its benchmark rate at 3.75%, with Governor Andrew Bailey signalling policymakers remain ready to act as inflation risks intensify following the escalation of conflict in the Middle East.
Officials now expect inflation to climb to around 3.5% in the near term, reversing the steady decline seen over the past year, while a rare unanimous vote underlines growing concern about the outlook.
Nigel Green says: “Just weeks ago, markets were expecting rate cuts. It’s a view that has been overtaken by events.
“Energy prices are rising again, inflation forecasts are moving higher, and the Bank of England, among other global central banks, is shifting into a more cautious stance.”
He continues: “We believe that rates are now likely to remain elevated for longer than investors had priced in, and there’s now a credible discussion about whether the next move could even be upwards if inflation proves more persistent.”
The shift is being driven by a renewed inflation threat linked to energy markets. Oil prices have surged above $110 a barrel amid geopolitical tensions, feeding directly into transport, food and production costs.
Inflation in the UK, already close to 3%, is now expected to accelerate again, while wage growth remains above 4%, adding further pressure.
The deVere CEO notes: “Inflation doesn’t need to surge to create problems. It only needs to stop falling.
“That’s enough to keep central banks on hold and delay any relief on borrowing costs. For savers and investors, that could change their entire strategy.”
He warns that many individuals remain positioned for a rate-cut cycle that may not materialise in the way they expect.
“Too many people are still anchored to the idea that interest rates will fall quickly and consistently. This assumption no longer holds. The environment is more complex, more uncertain, and more demanding.”
He adds: “Holding excessive cash might feel safe, but it carries hidden risks. Inflation erodes purchasing power, and once tax is factored in, many savers are making little real progress. Standing still financially is not protection.
“This is a higher-for-longer world, and investors need to respond accordingly. The focus has to shift from waiting for better conditions to making informed, forward-looking decisions now.”
He points to opportunities created by the current rate environment.
“Higher interest rates mean income-generating assets are back in play.
“Government bonds and high-quality corporate debt now offer yields that were not available for years. These can provide steady returns and the potential for capital appreciation when rates eventually move lower.”
He continues: “Equities also remain important, of course, particularly companies with strong balance sheets and the ability to pass on higher costs. These businesses are better positioned to maintain earnings in an environment where inflation is uneven.”
Real assets and sectors linked to infrastructure and energy are also gaining attention.
“Geopolitical instability and supply disruptions are reshaping global priorities. Investment is flowing into energy systems, infrastructure and areas that support long-term resilience. These are not short-term trades. They are structural opportunities.”
Nigel Green stresses that diversification and discipline are critical.
“Investors need to spread risk across asset classes, sectors, currencies and regions, and focus on quality. This is not a market that rewards passive positioning or guesswork. It rewards preparation and clarity.”
He concludes: “The conditions have changed, and portfolios need to reflect that.”
