Welcome to this week’s Market Pulse, your 5-minute update on key market news and events, with takeaways and insights from the Sidekick Investment Team.

Today, we’re looking at Labour’s Employment Rights Bill being approved after months of debate, Wall Street forecasting strong gilt performance in 2026, and major automakers retreating from electric vehicles.

But first, our number of the week…

0.1%

That’s how much the UK economy shrank in October, according to ONS estimates released last Friday. That figure follows an identical contraction in September and flat growth in August.

Sidekick Takeaway: Unless the UK economy substantially rebounded toward the end of the year, the country could be facing its first quarterly GDP drop since 2023. That possibility puts mounting pressure on Starmer and Reeves to shore up the economy amidst voter frustration.

Only have a minute to read? Here’s the TL;DR:

• Labour’s Employment Rights Bill was approved after months of debate, with a package that includes day-one parental leave rights and restrictions on zero-hour contracts. While the deal is expected to cost UK businesses up to £5 billion annually, major business groups ultimately supported the legislation.
• Wall Street expects UK gilts to deliver strong returns in 2026 as the BoE cuts rates to support a flagging economy, with 10-year yields forecast to fall 20-60 basis points. However, fiscal policy uncertainty under Starmer and Reeves could drive yields higher than expected.
• Ford announced a retreat from EVs that could cost the company up to $19.5 billion, joining GM and Stellantis in rolling back similar initiatives. The reversal reflects disappointing consumer demand and regulatory changes that have scaled back EV incentives across the EU and the US.

It’s important to note that the content of this Market Pulse is based on current public information which we consider to be reliable and accurate. It represents Sidekick’s view only and does not represent investment advice - investors should not take decisions to trade based on this information.

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Labour of Love: Workers’ Rights Bill Finally Approved

As part of Labour’s manifesto in the 2024 election, Keir Starmer promised swift action on workers’ rights.

In reality, employment legislation proved trickier to pass than initially anticipated. Resistance from business groups and the Conservative Party led to months of debate.

At long last, however, Labour’s landmark Employment Rights Bill was approved this week.

The deal has been hailed by trade unions as amounting to a ‘generational shift’ in employment protections in the UK.

While the agreement is watered down from original proposals, the legislation is still expected to cost UK businesses up to £5 billion per year – sparking concerns about how it might affect growth.

Workers’ rights package: A double-edged sword

Following tense negotiations in both houses of Parliament, key elements of the approved legislation include:

• Day-one rights to paternity leave and unpaid parental leave, down from 26 weeks of service under current rules.
• New restrictions on zero-hour work contracts, although the legislation stopped short of banning them entirely.
• The creation of a Fair Work Agency, which will have strong powers to conduct workplace inspections and bring civil proceedings against employers.

At the same time, Labour MPs agreed to scrap certain proposals to get a deal done. Notably, these included removing day-one rights to claim unfair dismissal.

Sidekick Takeaway: Despite concerns from employers, some of the UK’s largest business groups (including the influential Confederation of British Industry) ultimately ended up pushing lawmakers to pass the bill. That should help mitigate concerns that the new protections will be calamitous for growth.

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The Gilted Age: UK Bonds Expected to Climb in 2026

Amidst widespread policy uncertainty, the gilt market has seen repeated bouts of volatility this year. 

Yet despite that volatility, UK bonds have delivered admirable performance in 2025. The Bloomberg Gilt index, which tracks bonds of varying maturities, has generated a total return of 4.8% this year.

According to Wall Street, this strong performance is expected to continue in 2026. 

But while that might be good news for investors, it indicates a complex outlook for the UK economy as a whole.

Gilt yields expected to fall in 2026 as BoE supports growth

Wall Street anticipates a strong gilt market in 2026 for one main reason – yields, which move inversely to prices, are expected to fall.

That’s due to the Bank of England’s rate-cutting campaign, designed to support the UK’s flagging domestic economy:

• According to the average forecast from several large investment banks, the 10-year gilt yield is expected to decline about 20 basis points by the end of 2026.
• But some banks are even more bullish on gilts, with Morgan Stanley expecting 10-year yields to drop by 60 basis points.
• According to the OECD, the UK economy is expected to grow by just 1.2% next year, justifying more rate cuts by the BoE.

In fact, the BoE cut rates this week in a move that could prelude several more cuts in 2026.

Sidekick Takeaway: Despite Wall Street’s forecasts, UK fiscal policy remains a notable area of uncertainty for the gilt market heading into the new year. With Starmer and Reeves navigating internal dissent and voter frustration, increased public spending could end up driving gilt yields higher than expected.

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The Great Reversal: EV Revolution Stalls as Automakers Scale Back

Just a few years ago, it seemed like the electric vehicle revolution was all but inevitable.

Backed by regulatory incentives and legal mandates, legacy automakers were increasingly pivoting toward an EV future.

But now, that momentum appears to have stalled out. In one of the most significant reversals, Ford announced this week that it would be retreating from EVs.

And Ford isn’t alone in its decision, with other automakers also scaling back landmark electrification initiatives.

Automaker EV reversals driven by demand, regulation

Back in 2018, Ford promised that it was ‘all in’ on EVs. Now, the firm expects its U-turn to lead to $19.5 billion in charges.

Ford is joined by companies like GM and Stellantis, which have elected to cancel future EV models and roll back current production.

These moves partially reflect disappointing customer demand. Despite early excitement, global EV sales growth has slowed noticeably. 

But arguably more important is the impact of government policy.

In the US, recent legislation eliminated EV tax credits. And in Europe, the EU has backed away from its mandatory timeline for phasing out combustion vehicles. 

Increasingly, the notion that EVs will completely replace traditional cars appears more and more unrealistic.

Sidekick Takeaway: In the UK, the government has insisted that plans to ensure all new car sales are EVs by 2035 will remain in place. Nonetheless, discontent over that plan is growing, and calls for a change may grow louder given regulatory adjustments in Europe and America.

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Notices

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