HAMISH MCRAE: Investors should expect some big bumps in 2025
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So will 2025 be any better? The past year has been disappointing for most of British business, for UK investors – unless they have a large chunk of their money in the US – and for those of us who predicted better times a year ago. We start from an uncomfortable position. It has been a year of two halves, the first showing decent growth and the second very little at all. The third quarter was flat, and early reports from retailers about November and December suggest that if anything, things have got worse.
My own predictions a year ago that the FTSE 100 index would rise to 8,500 and the pound to $1.40 looked all right during the year, with the Footsie topping 8,474 in inter-day trading in May and the pound reaching more than $1.34 at the end of September. But they look hopeless now.
My other predictions have proven even worse. The market value of Apple, instead of falling back below $3 trillion, has shot up to nearly $4 trillion. The yield on 10-year gilts, far from staying at around 3.5 per cent, is now more than 4.6 per cent. And as for my expectation that the value of Bitcoin would collapse to below $20,000 – well, it topped $106,000 a few days ago.
The only thing that I got more or less right was that UK house prices would rise by 5 per cent. Halifax calculates they were up 4.8 per cent in November and the trend has been rising, so when we get the December numbers, we should be there. So what went wrong? The easy answer is that the new government has been much less competent than we could reasonably have expected, saying the economy was in a mess when actually it was growing very well, and then clobbering it with that dreadful Budget. As a result, the reassessment of the UK as a good place to invest hasn't happened; indeed quite the reverse.
