What's Happening in the World of Personal Finance?

Outlook for 2018

At times, the Brexit negotiations appear to dominate all decision making yet, despite the relentless doom and gloom predictions, markets have, by and large, remained calm and relatively stable. The volatility seen at the start of the year was due more to the phony “trade war” between China and USA and with Trump in charge this could recur at any time. From our point of view, the markets are a little high at this time and we would expect to see a possible market correction later in the year, although the timing and extent of this is uncertain.

The first increase in interest rates for a decade occurred in November 2017 to maintain control of inflation. We expect that any further increase in interest rates will not prove necessary until the latter part of 2018, due to the weaker performance of the UK economy in the first quarter of the year. .

President Trump continues to astound and confound in equal measure. Whilst he has been active in making aggressive statements regarding various part of the world, we have yet to see the benefit or otherwise of such actions. The measures now in place for both Corporate and Personal Tax reform provides some underpinning for the US market although it cannot continue indefinitely at this high level. However there is the expectation of some pause for breath, and possible market correction along the way. We consider that there are sufficient positive underlying factors to accommodate such an action.

Europe continues to offer investment opportunities in many areas. It is vital for the future success of Europe that Macron succeeds in harmonising working practices in France as the outcome of this has an impact on Europe which is certainly comparable to any Brexit negotiations.

Japan continues with the Quantitative Easing cycle and this seems to be having some success, reflected in both (modest) inflation growth and stock-market performance.

Emerging Markets are forecast to grow by 5% in 2018, with growth in China declining but still reaching around 6%. The concern with the Emerging Market sector is that any significant correction in the USA markets could have a ripple effect, which may nullify any gains made here. .

With the interest rate cycle at a turning point caution is required with fixed interest and many available funds are showing a preference for credit risk rather than interest rate risk. There are several equity funds that provide income comparable with and in excess of that offered by fixed interest funds at this time.


The ISA allowance remains unchanged at £20,000 for 2018/19 and provides a great opportunity to boost tax efficient savings. The restriction on the amount held within the cash component has been removed completely and there is also the ability to withdraw funds contributed in the current tax and replace them in the same tax year, giving greater flexibility. The move to allow ISA allowances to be transferred to a surviving spouse is also available to help mitigate tax.