It feels like it hasn’t been a great year for the UK stock market, largely due to the tariff-induced fear that wiped millions off the market in early April. However, when looking back, 2025 is actually shaping out quite well. Even with the April losses, the FTSE 100‘s up almost 7% this year — more than it achieved in the first half of 2022 or 2023.
Even in 2024 — a year of notable growth — it was only up 6.7% by the time June rolled around. If the growth continues, we could have our best year since 2021, when Covid stimulus helped deliver 15% growth.
But uncertainty still lurks among the geopolitical corridors of the world, threatening to unravel its success. Let’s have a look at what potential events could send markets spiralling again — and how to prepare.
How did we get here?
To assess where a market — or share price — is heading, first we must understand why it is currently where it is. Right now, the UK market looks good — but its growth may be built on a fragile foundation.
After a tough end to 2024, it’s likely that market participants have already priced in soft landings and rate cuts in 2025. Any unexpected news related to inflation, credit changes or geopolitical events could lead to a sharp correction or crash.
Interest rate surprises are a key concern, along with global debt levels, conflict escalation and the Chinese property market. These are the areas that smart investors will be keeping an eye on as the year progresses.
Prepping for a fall
My outdoorsy friends love the saying: “Failing to plan is planning to fail“. Basically, before wandering off into the mountains, make sure you’ve planned for every possible outcome.
I often think of this phrase when making my stock picks. “Those soaring tech stocks sure look attractive. They’ll keep going up, right?”
Well, some of them will — until they don’t. But some stocks DO maintain steady growth, albeit at a slower pace. These are known as defensive stocks, and they can be life savers when everything else is collapsing.
Unsurprisingly, under-pressure people tend to be less interested in artificial intelligence (AI) or quantum computing during tough times. Yet food and medicine remain in high demand. That’s one reason the leading consumer staples giant Unilever (LSE: ULVR) didn’t suffer huge losses during Covid.
A strong defensive pick
Unilever’s often hailed as one of the best UK defensive stocks due to its portfolio of popular brands like Dove, Persil and Hellmann’s. These everyday essentials tend to enjoy consistent demand through even the worst of times, providing a buffer against market dips.
With operations spanning over 190 countries, Unilever benefits from geographic diversification and exposure to emerging market growth. Plus, its strong cash flow supports reliable dividends, making it attractive to income-focused investors.
However, there are risks, including input cost inflation, currency fluctuations and slower growth in some developed markets. Competitive pressures and shifting consumer preferences also require constant innovation. That may be part of the reason why management recently renewed its focus on efficiency and brand strength in an aim to improve performance.
For investors seeking a stable, income-generating stock with global reach and resilience through economic cycles, Unilever’s a solid stock to consider.
