Heart of Hardman - How should UK investors look back at 2024?

Well, at the beginning of the year, investors worried about political events. When would the UK General Election be (it could have been as late as January 2025), how close would it be and who would win? In the US, the betting was it was too close to call and that the wrangling over the outcome might go on for months through the courts. In the end both uncertainties evaporated. Labour won convincingly in July in the UK and Trump wiped out Harris in November.?

We saw interest rates start to come down slowly; in the UK the Bank of England cut twice from the recent peak of 5.25% to 4.75%. The US economy boomed and the FTSE 100, which started the year at 7,733, is at the time of writing?8,314, a 7% gain.?

Ahead of October’s Budget, investors prepared for drastic measures to raise tax revenues. Since rises in taxes on ‘working people’ had been ruled out, it was felt that investors would be hit hard; tax reliefs would be curtailed, Capital Gains Tax increased, ISA investments capped. The reality was rather different. It was employers who were coshed with a higher Employers' National Insurance rate and lowered starting thresholds. It is becoming clear that working people will be hit as redundancies are announced and employers cut recruitment plans. In fact, investors have been less affected than feared; yes, AIM Inheritance Tax relief has halved and CGT rates have increased, plus IHT relief on pensions is scrapped. However, the reliefs on EIS, SEIS and VCTs are unchanged, making them more attractive.

2024 will be remembered as a period when lots of UK quoted companies delisted or fell victim to takeovers from private equity and foreign buyers. Generally, the future for UK public markets looked miserable.

Yet, there is hope for 2025. Interest rates will continue to fall in the UK, albeit more slowly than originally forecast. There is common ground among market participants and politicians of all hues that vibrant capital markets are vital to economic growth. Much progress has been made to encourage investors into the market, in particular retail investors, and the legal noose and regulatory strait-jacket around quoted companies are being loosened. There are early signs that the continual outflow of institutional monies from UK equities may be coming to an end.

We look forward to helping our clients get their message to a range of investors, and hope?for good investor returns in 2025.

We wish you a joyful festive season and a prosperous New Year.

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