St. James’s Place WeekWatch 6th January 2025.
Thank You, St. James’s Place Asia and Middle East, for sharing the latest financial market update with THE EXPATRIATE community. This week’s SJP WeekWatch discusses the following;
Stock Take - The impact of 50% of the world’s population voting in an election in 2024, and in many instances, people voted for change.
Trump's tariffs and how nations may respond.
The challenges nations face are tackling inflation, high interest rates and avoiding debt crises.
Wealth Check - Five tax-smart tips for managing your money in 2025.
In the picture - business confidence in Europe is weak after a year of slow growth, which is wildly contrasting to business confidence in the US.
The Last Word - How will Britton fix the NHS?
Stock Take
Last year, over half the world’s population voted in an election and, in many cases, voted for change.
Commenting on the last 12 months, Hetal Mehta, Head of Economic Research at SJP, said:
“In a year peppered with many notable elections, the global economy was marked by heightened economic uncertainty in 2024. Despite concerns at the start of the year that restrictive monetary policy would weigh on GDP, growth surprised to the upside and recessions in the key developed market economies were avoided. A gradual cooling of labour markets - lower vacancies and lower wage growth without a significant increase in unemployment – combined with progress in taming inflation, has allowed central banks to pivot policy towards gradual rate cuts.
But with the major elections behind us, it’s now time for governments to start implementing their policies.”
A key policy for investors is the potential use of tariffs. Donald Trump mentioned tariffs often during his election campaign and continues to discuss them. Other countries have also threatened to impose tariffs in response. Tariffs usually lead to higher prices since costs are transferred down the supply chain, which may influence Central Banks considering how quickly to lower interest rates.
In 2024, expectations about how quickly interest rates would change in the US slowed, as bringing inflation back to 2% was more challenging than anticipated.
Federal Reserve official Adriana Kugler acknowledged at the American Economic Association conference in San Francisco last week:
“We are fully aware that we are not there yet - no one is popping champagne anywhere.”
In 2024, large US stocks performed well despite inflation. The S&P 500 saw its second consecutive annual return of over 20%. The NASDAQ also rose more than 20% for the sixth time in eight years.
The political situation in Canada is unclear. Prime Minister Justin Trudeau has resigned. Canadian elections are scheduled for October, and Trudeau’s Liberal party is falling behind in the polls.
In Europe, the political situation is uncertain for many countries. This year, Germany, which had an election, showed the centre-right Christian Democratic Union (CDU) and its Bavarian partner, the Christian Social Union (CSU), leading in polls. The far-right Alternative for Germany (AfD) trails behind them.
The French political system faces challenges as Prime Minister François Bayrou, appointed in December, must deal with a possibly unfriendly parliament, making it hard to pass reforms.
France and Germany, key players in the EU, have faced difficulties recently. At the same time, countries like Spain and Greece, which struggled during the Eurozone debt crisis after the 2008 Financial Crisis, have reported unexpectedly good economic results in the past year.
In the UK, there are concerns about possible 'stagflation' in 2025, which means rising prices with no economic growth. The Bank of England will face challenges in lowering interest rates to boost growth while managing inflation.
Wealth Check
Making quick money decisions can lead to late fees, lost interest, or penalties. However, organizing your finances and beginning regular savings can greatly improve your financial and emotional health.
These are our top five tax-smart tips for managing your money in 2025.
1. Make the most of your allowances
Do you know how many tax allowances you have and if you use them entirely? Many people remember maximising their ISAs before the tax year ends, but other overlooked allowances can save money.
Did you know, for example, that in addition to the £60,000 annual pension allowance (or 100% of your earnings, whichever is lower) on which you can qualify for tax relief on pension payments, HMRC will let you carry forward any unused allowances from the previous three tax years?
2. Check what you’re worth
When was the last time you checked how your pensions were doing? How much interest have your savings accounts or ISAs earned? Listing all your assets, from pensions to property and premium bonds, is a tax-smart start. However, reviewing them regularly is an even smarter money habit for long-term financial well-being. You may have more than one pension pot if you’ve changed jobs in the past. And if you have an easy-to-access cash fund for emergencies, does it still have enough to keep you and your family afloat for up to six months, if necessary?
3. Spring clean your spending!
How many memberships and subscriptions are you currently signed up for? Checking that you or another family member still uses the service you’re paying for is another smart money move. Those small monthly payments add up. You might want to switch to another provider or unsubscribe completely.
4. Set up regular contributions to ISAs, savings or pensions
Regular monthly payments into your savings or pension is a smart tax move. It helps you prepare before the tax year-end and avoids the rush to increase your tax-efficient ISA contributions before April 5. Additionally, consistent contributions to investments can reduce the impact of stock market ups and downs.
5. Check in regularly with a financial adviser
Spending an hour each week to review payments or interest rates can save time and taxes later. It's also important to meet regularly with a financial adviser to ensure you're on track to meet your investment goals for long-term financial health.
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In the Picture
Business confidence in Europe is weak after a year of slow growth, wildly contrasting to business confidence in the US.
The Last Word
"This year we will show Britain can change...politics can be a force for good and we can unite the NHS behind a plan for reform.”
British Prime Minister Keir Starmer on his government’s plan for the NHS.
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