2024 Predictions - Part 1

Christmas is my favourite time of year. It's the one time in the calendar where the phone stops ringing, work stops and in amongst the festivities I get some time to think. Throughout December, I enjoyed the usual round of social events; pre-Christmas drinks and lunches and I asked as many people as possible the same question, "What is going to happen in 2024".

I have a pretty broad network to draw on (as you'd expect, I am Headhunter after all) and I was able to ask that question to dozens of people, from Government ministers, hedge-fund managers and CEO's to blue collar trades guys, artists and artisans. On boxing day, I reflected on the varied (and often alcohol fuelled) responses and with a good bottle of pinot and the last of the mince pies, I opened my laptop to write this article.?

Overall, I think 2024 will be less exciting than 2023 but it’s the year in which big geopolitical lines will be drawn that will shape the next decade and beyond.?

I have broken this down into 3 parts, here are the first 10, I hope you find something in here to interest you.

Part 1:? UK Economy

1.? 2024 will be economically stable - Inflation will drop below 3% and interest rates settle at 4%

2024 will be politically unstable, but in spite of this, perhaps counter-intuitively, there will be economic stability which in turn will bring slow growth. With the worse effects of the past 4 years now in full effect, resilience is somewhat baked into the 2024 economy. Even war in Europe is now an accepted feature of day to day commerce. With no real appetite for anything radical to happen before the US November election, Western economies will have a boring year of stable incremental growth.? EU countries will stave off recession, the US economy will continue to rally and the UK will continue it’s 100% track record of doing the opposite of whatever the governor of the Bank of England says will happen and will have the strongest performance of the European economies.? However, the effects of interest rate rises in 2023 will still be felt through 2024 despite rates dropping in early 2024 to around 4% to 4.5% where it will remain, the result will be predictable and steady economic gains but no rapid ‘boom’. ?

2.? The Rise and Rise of Leisure and Travel:

Consumer spending will be tighter in certain areas but people are not willing to sacrifice holidays and key leisure activities. Travel and holidays will have a good year and the desire to travel and enjoy instagram friendly experiences will be one of the best performing areas of the UK economy. We will see talent flowing back into travel from other sectors and there will be some noticeable Mergers and Acquisitions as boards in big firms as well as VC and PE teams scramble to cash in.

3.? Fashion, Luxury & Jewellery will have a flat year, but beauty will do well:

In order to fund holidays, consumers will spend less on luxury items like Jewellery, Handbags and Luxury fashion, preferring to spend money on holidays and experiences, extending a trend we’ve already observed in 2023.? The beauty industry was typically resilient in the 2022/23 the down turn and it will continue to maintain it’s position.

4.? Ecommerce is established back on it’s long term growth curve, unlocking investment:

In general terms, Ecommerce businesses that sell products online enjoyed an enormous boom in 2020/2021 but this was followed in 2022 by a relative bust.? 2023 has been better, it’s still hard going with high operating costs but as we leave 2023 behind, FD’s are looking back on a relatively stable 12 months. With stability comes predictability and that means investment. In 2024, brands will begin to seek market share as they move from survival mode to growth mode. Skills honed in the lean years of 22 and 23 will pay dividends. The discipline learned in the past two years will mean brands tend to trust google slightly less and are much better at using first party data and CRM is now a much bigger focus.?

5.? A nation of Pet owners ?

A bigger surprise for 2024 is the rise and rise of pets and pet related industries. With so many people getting pets in lock down and more people working split weeks from home, we’ve seen an explosion in the number of households with pets and home working practices means this trend will continue. I expect to see big investments and some M&A activity, pet-food and vets are the one’s to watch.

6.? Boom in Private Health Insurance & Health Tourism:

The performance of the NHS will not improve in 2024 and public confidence will continue to crumble. This will be a boost to private health insurers who will see a strong flow of new customers eager to avoid reliance on the NHS.? There will be an uplift in health tourism as people seek treatment overseas.? We can expect to see innovation, investment and some M&A action into private health, more of this later.?

7.? Overtime, Side Hustles, Lodgers and Entrepreneurialism:

Tighter house-hold budgets will see an increase in people using spare time, resources and capacity to raise extra money.? This will mean more money flowing through the cash economy. Many people will cover mortgage increases by taking a extra job or renting out spare rooms and we can expect to see a large take up of HMRC’s ‘rent a room’ tax scheme (￡7,500 tax free income from renting a room in your house if you didn’t know).? Tech firms who enable sole traders will do well; think mobile peer to peer payments apps, market places and rent a room websites.?

8. House Prices Settle:

As interest rates stabilise at 4-4.5% in early 2024, so will house prices. There is still a shortage of supply of housing stock and once interest rates appear to stabilise, the market will begin to flow slowly, though housing stock may not look like such a good long term investment going forward.

9.? Investment - long term bets on Heath, Defence and House Building

It’s very fashionable in booming economies to invest heavily into brands than don’t make money but enjoy massive growth. However, being a loss making business is less fashionable in 2024 and we can expect to see less speculation on future unicorns and more investment into sound cash generating firms. ?

With the economy beginning to grow, investors will begin to pick stocks and speculate on which industries will come out of the economic hair pin bend first and we can expect to see some strategic long term investments. With the UK housing crises, defence and NHS reform all high on the UK government agenda, I expect to see big investments flowing into those three areas; healthcare/medical, house building/materials and defence.?

10. Corporate Landlords:

2024 will see private landlords who rely on mortgages to fund their business continuing to exit the market (not helped by hostile government policy).? The resulting shortage of rental housing stock at the same time as a growing population through 2024 will drive rents even higher causing further issues for renters. With an un-exciting stock market and below inflation economic growth, it’s likely that some corporate investment funds sitting on cash will eye up stable house prices and ever increasing rental yields and use their cash to hoover up property portfolios.? Rental returns are un-exciting but predictable and steady if you don’t have to pay interest on a mortgage. It’s likely we will also see large increase in HMO’s, or ‘houses with multiple occupants’ as it becomes too expensive to rent entire houses or flats. Housing will be a major feature in the looming general election.