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This column by our chief economic strategist Gerard Lyons appeared in The Times on Wednesday 20th November, 2024.
After a hard fought race, the US electorate delivered their verdict on the last four years of a Democrat administration, with an emphatic win for the returning Donald Trump and the Republican party. Yet what does this victory mean for US assets? Will it be an echo of Trump’s first presidency from the 2016 vote, and how should investors respond to the impending change of leadership in the world’s leading economy?
The Chancellor began her Budget speech by putting it in a historic context, citing 1945, 1964 and 1997, three years in which Labour regained power in the post-war period. The only other year in which Labour also achieved that was 1974, and while the Chancellor did not cite this year it may be more appropriate than the others. The 1970s, like now, were a difficult backdrop for the economy, in an increasingly turbulent world.
This coming Wednesday, Rachel Reeves will deliver her first Budget as Chancellor.
This year has been unusually busy for elections, with over half of the world’s adult population voting in some form. The US election on November 5th will be the most significant, politically and in terms of market impact.
This column by our chief economic strategist Gerard Lyons appeared in The Times on Tuesday 1st October, 2024.
The Budget on 30th October has already been foreshadowed by the government as likely to be “painful”. And while we don’t know what areas of our personal finances may be affected, those who have savings, pensions and investments will probably be impacted in some way. It could therefore be a valuable exercise to assess your own circumstances to help you prepare if you do need to act fairly promptly.
Inflation, the rate at which the prices of goods and services increase over time, has become a significant concern in recent years. The post-pandemic economic landscape has been marked by supply chain disruptions, pent-up consumer demand, and large-scale fiscal and monetary interventions. These factors contributed to a sharp rise in prices, directly affecting the cost of living. Although the peak of this inflationary wave may have passed, the risk of future inflationary pressures remains a persistent challenge for investors.
At the end of October the Chancellor will deliver her first Budget. Already the markets, as well as the general public, are expecting a tough Budget. This is a reflection of the messaging from the Government in recent weeks, the fiscal stance that has been inherited and the existing high level of UK debt.
When interest rates are high they can be a useful alternative to investing, in particular for those who are more risk averse and are apprehensive about entering, or remaining in, markets. However, as rates start to fall, the presumption of cash savings as being the safest environment for your money should be challenged, especially if you hope to meaningfully grow your funds and realise your long-term plans. Inflation can begin to erode the real value of your capital and you should therefore take appropriate action if necessary.
Team Contributors
Gerard Lyons
Iain Barnes
Simon McConnell
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