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Winter 2025
As a new year dawns and we ponder what the next 12 months may hold for us as individuals and investors, one thing is for certain – some familiar challenges lie ahead.
The International Monetary Fund (IMF)1 unveiled its latest economic assessment the week prior to the US
election, proclaiming a period of ‘stable but underwhelming’ global growth for the year ahead. The update also predicted a return to a more neutral monetary policy stance as inflation in most economies steadily falls towards target in 2025.
The report acknowledged ‘exceptional’ levels of uncertainty, which Donald Trump’s subsequent return to the White House has done little to ease. Quantifying the impact of the Republican’s victory is difficult at this stage, but a return to US protectionism and the prospect of trade wars certainly pose a threat to the global economy.
A global phenomenon
The IMF forecast also highlighted some structural challenges that are expected to temper global growth, with an ageing population amongst the most prominent. As well as impacting the economy and presenting an investment theme to capitalise on, the unfolding longevity megatrend is a global phenomenon, which presents a financial challenge at a personal level too as we live longer.
Life goals
Research2 suggests most of us are vague when it comes to financing increased longevity – less than a third of 55 to 64-year-olds, for example, currently prioritise funding retirement. Preparation and setting life goals typically makes us feel more in control of, and optimistic
about, our futures and is undoubtedly key to confronting the realities and practicalities of living longer. Such targets, though, do need to be
Talk, support, plan, live
Encouragingly, the research also found that people who use an adviser tend to be better prepared for later-life eventualities, whether that be financing retirement or providing support for loved ones. Considerations extend to emotional and practical, as well as financial. Another element of longevity is successful communication. Advice helps clients successfully navigate the financial landscape as well as encouraging them to engage family in financial conversations; we can support you on all counts – it’s all in the planning!
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Autumn 2024
Reassuringly for investors, the latest batch of projections from economic soothsayers continues to predict a period of steady, if unspectacular, global growth. The forecasts also highlight a number of economic concerns including ‘sticky’ inflation, large budget deficits and geopolitical uncertainties, which could inevitably create some investment challenges.
Growth rates beat expectations
Economic growth figures released over the summer generally proved stronger than analysts had expected, particularly in relation to Europe and the US (in Q2). And while economic momentum is expected to soften across the second half of this year, forecasters are still predicting steady rates of growth. The latest figures from the International Monetary Fund (IMF), for
instance, forecast global growth of 3.2% for the whole of 2024 with the rate rising slightly to 3.3% next year.
Inflation persistency
The IMF’s musings were contained in a report entitled ‘The Global Economy in a Sticky Spot,’ which highlighted two prominent near-term risks currently undermining growth prospects. Firstly, the
IMF warned that ‘services inflation is holding up progress on disinflation’ which could result in interest rates remaining ‘higher for even longer.’ Secondly, a deterioration in public finances has left many countries in a position of fiscal vulnerability and this is ‘magnifying economic policy uncertainty.
Elements at play
Economic resilience has flowed through to central bank monetary policy as global institutions have largely adopted a cautious approach. Slower but still positive growth, lower inflation and
interest rate reductions are a positive combination for investors.
Geopolitical uncertainties
In what was dubbed ‘the year of the election’, geopolitical uncertainties unsurprisingly continue to be a key concern as well. Indeed, their impact on global growth prospects can only be expected to rise in the near-term as the US presidential election looms ever closer. Continuing geopolitical conflicts and the rise in geoeconomic competition is also creating ongoing challenges for the global economy.
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Summer 2024
According to research1, 81% of the UK’s wealthiest individuals are ‘stressed’ about their finances, suggesting financial wellbeing is about more than just the totality of your wealth. So, virtually everyone has concerns about what their financial future will look like.
Planning for the future. The prime concerns for individuals centred around future planning and retirement, specifically maintaining a comparable lifestyle in later life (51%), the value of their investments (39%), providing for future generations (25%), the tax burden (24%) and falling victim to fraud (22%). Interestingly, almost three in five wealthy individuals (59%) in the UK are considering relocating overseas, to enjoy what they regard to be an improved standard of living (36%), lower property costs (28%) and a more favourable tax regime (21%).
The importance of financial wellbeing. Financial wellbeing is more than just having large sums of money. It’s a state of feeling secure and in control of your finances, both now and in the
future. According to the Global Financial Wellbeing Report 20242, across all the countries surveyed, people’s top goal is to ‘feel secure’ (94%), noting that people who feel financially confident are ‘two times more likely to have goals, ambitions and dreams for their life.’
Finding your purpose. While money can’t buy you happiness, as the saying goes, it can give you security and freedom. But to get there, you need to have a plan. A good starting point is to work out what’s most important to you and what you want to achieve. Wealth has the capacity to create a powerful purpose within our lives, provided we are able to unlock its true value by understanding your ‘why’. Once you’ve established this, you can create a plan unique to you that you can work towards with purpose. Unlocking the real value of your wealth We can help you to develop a clear understanding of what you want to achieve with your wealth, as well as provide you with the support and expert advice to help you develop a financial strategy that brings you closer to achieving those goals. There’s no point in worrying about your financial future when you could be taking valuable steps now to take control and face the future with confidence.
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Spring 2024
On 6 March, Chancellor of the Exchequer Jeremy Hunt delivered his Spring Budget to the House of Commons declaring it was “a Budget for long-term growth.” The fiscal update included a number of new policy measures, such as a widely-anticipated reduction in National Insurance, abolition of the non-dom tax status and new savings products designed to encourage more people to invest in UK assets. The Chancellor said his policies would help build a “high wage, high skill economy” and deliver “more investment, more jobs, better public services and lower taxes.”
OBR forecasts
During his speech, the Chancellor declared that the economy had “turned the corner on inflation” and “will soon turn the corner on growth” as he unveiled the latest economic projections produced by the Office for Budget Responsibility (OBR). He started by saying that they showed the rate of inflation falling below the Bank of England’s 2% target level in “a few months’ time.” He noted that this was nearly a year earlier than the OBR had forecast in the autumn and said this had not happened “by accident” but was due to “sound money” policies. The Chancellor also noted that the OBR forecast shows the government is on track to meet both its self-imposed fiscal rules which state that underlying debt must be falling as a percentage of gross domestic product (GDP) by the fifth year of the forecast and that public sector borrowing must be below 3% of GDP over the same time period. Indeed, in relation to the second rule, Mr Hunt pointed out that borrowing looks set to fall below 3% of GDP by 2025/26 and that by the end of the forecast period it represents the lowest level of annual borrowing since 2001. In terms of growth, Mr Hunt revealed that the updated OBR
projections suggest the UK economy will expand by 0.8% this year, marginally higher than the fiscal watchdog’s autumn
forecast. Next year’s growth rate was also revised upwards to 1.9% compared to the 1.4% figure previously predicted.
Cost-of-living measures
The Chancellor also announced a series of measures designed to help families deal with cost-of-living pressures. These
included: an extension to the Household Support Fund at current levels for a further six months; maintaining the
‘temporary’ 5p cut on fuel duty and freezing it for another 12 months; an extension of the freeze in alcohol duty until
February 2025; an extension in the repayment period for new budgeting advance loans from 12 months to 24 months, and abolition of the £90 charge for a debt relief order.
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