Kingston upon Thames Council's investments have yielded a return of 4.18%, surpassing the Sterling Overnight Index Average (Sonia) benchmark of 4.01% for the 2025/26 financial year. The council kept its invested cash highly liquid, placing it in daily money market fund liquidity instruments to achieve this return.
This positive performance was highlighted during the Audit, Governance and Standards Committee meeting on Wednesday, June 24, 2026, as part of the Treasury Management Annual Report. The report, available here, detailed the council's financial strategies amidst a volatile market.
Despite market fluctuations influenced by global events, the council's borrowing strategy focused on minimising additional borrowing by utilising cash reserves. Where borrowing was necessary, it was short-term, with the total borrowing for the council amounting to £379 million, which was £154 million lower than the capital financing requirement. The council's strategy for managing this borrowing involves aiming to refinance when rates are expected to be more favourable. To this end, the council took out two new one-year loans from the Public Works Loan Board (PWLB) and refinanced one maturing loan into two chunks to smooth out the profile and mitigate refinancing risk.
The market volatility was exacerbated by Liberation Day
tariffs at the beginning of the year, which were associated with US trade tariffs and led to interest rate increases. As a net borrower, this affected the council's treasury position. Further impacting the market was the conflict in the Middle East towards the end of the year, which caused a significant spike in volatility and interest rates, particularly as inflation was being brought under control and rates were expected to decrease.
