A Budget and a Presidential Election just weeks apart have shaken the financial world to its core with further volatility pretty much guaranteed for the months ahead.
Rumours of a tough Budget had been circulating for weeks when Chancellor Rachel Reeves finally delivered it to the House of Commons on Wednesday 30 October, with plenty of jeering from both sides of the chamber.
While it might not have been as dire as first expected – London’s AIM has yet to collapse – it was a tough one for businesses thanks to a steep rise in national insurance contributions making up half of the Chancellor’s £40billion tax raid.
There will be a knock-on effect to this, of course, with analysts predicting a tidal wave of small business closures and for those that can stay afloat, wage stagnation, a shuttering of new roles, increased costs passed on to customers and clients and generally tough times to come.
RECORD BORROWING
The tax raid was needed to fund record borrowing by the Chancellor (along with some light fiddling of long-standing fiscal rules) which in turn saw 2-year and 10-year bonds climb to 12-month highs before settling back down again.
In another blow to the Great British public, smaller mortgage lenders announced fixed rate increases almost immediately, slashing hopes that rates would come down with further Bank of England rate cuts expected – and which ultimately came on 6 November with a 25bps drop to 4.75%.
VICTORY PARADE
Just when we’d finally caught our breath post-Budget, Donald Trump stormed to victory in the US Presidential Election and a whole new round of turbulence followed.
From this side of the pond, it’s hard to really understand the political landscape in the US but it seems the markets are pleased with the outcome.
The S&P500 has reached record highs since – with Trump supporter Elon Musk on track to become the world’s first trillionaire.
While Musk’s personal financial status is interesting, it’s not as pressing as the need for the UK government to negotiate an exemption from Trump’s tariffs.
While all of this is fun to read about and digest, it is unnerving when your investments are potentially at risk from political changes.
This is why property is often a preferred long-term investment choice for HNWIs and UHNWIs.
Mike Jones is Chief Sales Officer at Tenn Capital
