We're wrapping things up for Christmas…
In a year that has seen dawn of the Carolean era, 2022 has been the year during which we saw success for the England Lionesses in EURO 2022, further success for the England ODI team in Australia, and the continued resurgence of the England Test Match team under the inspirational captaincy of Ben Stokes.
In other news, we have seen worldwide inflation on the rise. Central Banks were arguably slow off the mark to raise interest rates which has further fuelled inflation. We expect inflation to remain above 10% going into the new year. The Bank of England has enacted nine consecutive interest rate hikes, increasing the base rate from 0.1% to 3.5% in the last 12 months. A further interest rate rise is expected this month. The Bond market now believes that UK interest rates will peak at 4.25% during 2023, a far cry from the expected 6% anticipated only a few weeks ago.
The government has managed to restore a sense of calm in the markets with the Autumn statement. Despite the commitment to the triple lock resulting in the state pension increasing by 10.1% from next April, austerity remains very much the order of the day. The announced tax increases will hurt everyone, possibly until the end of this decade, irrespective of which party controls Westminster.
The Bond market now believes that UK interest rates will peak at 4.25% during 2023, a far cry from the expected 6% anticipated only a few weeks ago.
A key aspect of the Government’s financial plan will continue to be to bring inflation down towards the Bank of England target of 2%. This will not be easy to achieve. Surprise, surprise, we now having freezing weather in December, home energy bills are hurting (despite the Government subsidy), and we are firmly in another Winter of Discontent. We have just seen the second largest fall in real wage growth since records began, so can we expect the current series of strikes to continue in to 2023? We wouldn’t bet against it.
Cash deposits continue to lose value in real terms. Investments have had a challenging year to say the least. At some stage this current bear market will end, and investment returns will improve. We cannot predict when of course, but for our clients a well-diversified portfolio is key to future investment returns, and do not forget “It’s time in the market that counts, not timing the market that matters”.
The importance of good financial planning has never been so prevalent. Many will be targeting retirement, the cost of which has just increased and it is increasingly more important to have a plan in place.
We would like to wish all our clients a very Merry Christmas and we look forward to a much less eventful and prosperous New Year.
Would you like to win a bottle of wine? … Oh yes we would!
Enter our Christmas pantomime competition and be in with a chance to win a bottle of champagne!