Summer Property portfolio 2024 - Flipbook - Page 16
FINANCIAL REPORT
As was widely anticipated by the public and markets alike, Keir Starmer and the
Labour party (!) have moved into No.10. The party9s manifesto was moderate, and
highlighted policies which will try to push for economic growth whilst remaining
fiscally responsible. We won9t get full details on its plans for taxation and
spending before the Autumn budget, however, we don9t anticipate too many
surprises as the party will likely be conscious of volatility caused by radical fiscal
policy proposed in the September 2022 mini-budget. But there are no easy
choices for the new Chancellor 3 higher taxes 3 very likely, reduction in spending
3 very unlikely and more borrowing (loosening of fiscal rules) 3 quite possible in
fact, despite our assertion above!
The UK economy is in solid shape heading into the second half of the year.
Growth is moderate, and 20239s technical recession is behind us. Inflation is
heading back to target. The primary driver for stock, bond and property markets
over the coming months is still likely to be the path of inflation and interest
rates. With inflation falling back in line within the 2% target, the Bank of England
(BoE) hinted at its intention to lower policy rates at its August meeting. This
means that today9s deposit rates probably won9t last much longer, presenting an
opportunity to lock in higher yields in UK fixed income markets.
The expected changes to the planning laws to help achieve the house building
target of 300,000 will positively change sentiment towards the property market.
Given that high interest rates cool the economy and reduce the supply of
mortgage finance and working capital; an interest rate cut would probably have a
positive effect.
Protecting one9s wealth from taxation is a perennial problem and one simple
device is the Individual Savings Account or ISA. Individuals can subscribe up to
£20,000 per year into an ISA and invest in a very wide range of share and funds.
The income and capital gains from investments in an ISA are free from tax and
the 8flexi9 rules allow withdrawals such as income or capital to be replaced back
into the ISA by the end of the tax year
Labour makes much of the need to create stability and this could be a tailwind for
the UK economy and markets. The UK stock market is undervalued versus history
and other markets. Overseas markets offer a diverse range of opportunities in the
fortunes of the American, European, Japanese, and Emerging economies.
Given that the best time for investors is when policy makers are trying to revive
sluggish economies i.e., cutting rates etc, we have a positive outlook, and suggest
this is the moment to make that decision to invest.
If you would like anymore information please do not hesitate to contact Larch
Property for further infomation.
John Simpson, Chartered FCSI
Senior Investment Manager & Branch Principal
Audrey McKinstry, Chartered FCSI
Senior Investment Manager
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