Tax year-end is rushing up fast! Please consider the following and get in touch:
- ISA top-ups
- Pension top-ups
- VCT investing
- LISA allowances
- JISA allowances
- ISA allowances
- Carry forward pension allowance
- Halving CGT allowances next year
- Capital Gains allowances in large investment accounts (we can use proxy funds to lock in portfolio gains and use your capital gains allowance before you lose it)
- Bed and ISA (funding your ISA from investment accounts)
- Bed and SIPP (funding your Pension from your investment account)
Key points
- UK house prices have dropped for the fourth consecutive month as rising borrowing costs hit household finances, according to data published on Friday. According to mortgage provider Halifax, average house prices fell 1.5 per cent between November and December. The decline marks a slowdown from the 2.4 per cent drop recorded between October and November.
- According to new sector data that point to "another difficult year for consumers and businesses", UK food inflation continued to rise in December. Annual growth of UK food prices hit 13.3 per cent in December.
- Unions warned the government on Sunday that strikes would continue unless it reopened this year's pay settlement for health service workers ahead of crisis talks on Monday aimed at curtailing a wave of industrial action across Britain.
- US stocks and Treasuries slipped on Thursday, while the dollar strengthened after a stronger-than-expected jobs report underlined the labour market's resilience in the face of the Federal Reserve's aggressive campaign to tackle high inflation. Wall Street's benchmark S&P 500 lost 1.2 per cent, while the tech-heavy Nasdaq Composite fell 1.5 per cent, erasing small gains registered in the previous session. As hopes strengthened that the FED would continue their interest rate slowing cycle in 2023.
- Rising economic optimism buoyed stock markets on both sides of the Atlantic on Friday after eurozone inflation figures and US jobs data boosted hopes of a soft landing this year. But economists warned that while a recent significant fall in energy prices has bolstered prospects for 2023, underlying inflation would pressure central banks to raise interest rates further to keep price rises under control.
Comment
As we head into 2023, economists have warned of cautious optimism, but positive signals exist.
Goldman Sachs noted that lower wholesale natural gas prices, down over 75 per cent from their peak in Europe, would "boost real incomes; help to push down inflation; and improve government budgets". It added a further export boost would come from the end of China's zero-Covid policy. In both the eurozone and the US, the resilient economic data reinforced concerns that central banks will have to keep up efforts to bring inflation down to the low levels that preceded last year, despite clear indications that price rises have peaked. Central bankers worry that inflation may stay around 4-5 per cent rather than falling to its 2 per cent target on both sides of the Atlantic. Whilst In indications that the US economy is still hotter than the Fed would prefer, the job gains figures of 223,000 for December outstripped economists' expectation of a 200,000 increase.
However, economists have predicted The UK will face one of the worst recessions and weakest recoveries in the G7 in the coming year, as households pay a heavy price for the government's policy failings. The combination of falling real wages, tight financial conditions, and a housing market correction is as bad as it gets. Forecasts compiled by Consensus Economics show UK GDP shrinking by 1 per cent in 2023, compared with a contraction of just 0.1 per cent for the eurozone as a whole and growth of 0.25 per cent in the US. UK grocery sales reached £12.8bn in December, as mounting food prices raised households' Christmas shopping bills, as annual growth of UK food prices hit 13.3 per cent in December. The typical property price fell to £281,272 in December, down from £285,425 in November. This is considering the rising interest rate levels we saw in 2022. According to price comparison site Moneyfacts, the average two-year fixed rate loan was 5.8 per cent at the end of 2022, up from 2.4 per cent at the close of 2021. According to the Financial Times's calculations, the difference would add nearly £500 to monthly costs based on a typical £250,000 repayment mortgage.
According to a private survey, China's factory activity contracted in December, highlighting the economic costs of the abrupt abandonment of its strict zero-Covid regime as it battled a nationwide wave of infections. China's official PMI data, released over the weekend, showed a steeper decline in economic activity. Its manufacturing and services gauges came in at 47 and 41.6, respectively, falling to their lowest levels since early 2020 at the beginning of the Covid-19 pandemic. A reading below 50 indicates a contraction, while one above 50 signals an expansion.
Kind regards
The Elsby Wealth Management team
