Investment – The Near Term Future for the United Kingdom
Although Brexit is not yet fully settled, much economic uncertainty has been removed by the resounding victory of the Conservative Party in the General Election on 12th December 2019.
So what effect will this have financially for you?
The Conservatives have indicated a budget in early March, with promises of tax cuts, which could encourage further spending to assist UK economic recovery.
However, the UK base interest rate remains at almost a historical low of 0.75% and does not seem likely to rise significantly in the near term. This could provide further impetus to the housing sector, which was also concerned regarding a future Labour Government, due to the extensive proposals in the Labour Party manifesto.
Overseas, despite continuing concern on the deteriorating Iran situation, the United States main investment index the Dow Jones remains at or near to an all-time high, with US economic fundamentals strong.
There is some concern in the US market regarding the impeachment of Donald Trump by the Democrat majority in Congress, but no US President has ever been removed from office as a direct result of impeachment – Richard Nixon resigning before action could be taken.
Further it is necessary to achieve a two thirds majority in what is already a Republican dominated Senate, so the chance of removal is remote.
One other concern however worldwide is the possibility of a significantly increased oil price if the Middle East situation deteriorates, with implications for western economies and inflation. Much will now depend also upon what action if any President Trump decides to take, following the latest Iran missile strike.
The UK FT100 Index has increased moderately since the General Election and continues to offer an average dividend yield of around 4%, which is competitive for those requiring income, against cash deposits.
Concerns remain of course but investment risk can be managed, with risk and reward being often linked. Such entails regular review of investment strategy, in the light of changing individual circumstances, not to mention often difficult world events.
As always professional assistance should be sought in reviewing investments and income requirements with George Ide Investment Department remaining happy to assist.
John Atkinson. Chartered Wealth Manager.
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