Hello,

 

UK stocks lagged considerably behind their US counterparts in 2024 as enthusiasm waned in the latter half of the year. UK equities gained by 15% in euro terms over the course of the year. Whilst in a historical context this isn’t bad, it pales in comparison to the 33% return from the US market. This was symptomatic of the rift between the two economies. When the Labour party won the July general election by a landslide, there were hopes that political stability would improve the attractiveness of UK assets. However, the new government’s budget cast a sour taste and dented consumer confidence (as did a raft of proposed private pension reforms).

 

The British public was promised an economic revival, but for now, it has flatlined. Moreover, the openness of the UK’s economy leaves it particularly exposed to potential US tariffs. However, whilst investors are lacking optimism, mergers and acquisitions (M&A) activity in the UK indicates that corporate buyers are much more enthusiastic. In November, it was reported that the value of M&A deals involving UK companies had grown 57% so far in 2024, compared to the same period in the year previous. High M&A activity typically indicates that companies are confident in the future, and Chancellor Rachel Reeves has been eager to stress the long-term horizon of the Labour Party’s economic strategy. For an expert opinion on our geographical outlook for equities and other asset classes, please join us for our webinar: “Investment Outlook 2025 – Maintaining Perspective” on Thursday 9th January, 2025.  

 

As always, if you wish to discuss anything in this newsletter in further detail, please do get in touch.