Another year has ended, a fresh one has begun and with it will come a raft of new regulations, a possible new government and, many would hope, economic improvement.
The past year will be remembered for the introduction of consumer duty, a shaky economy and jitters in the housing market.
The next 12 months will see an additional host of new rules, the potential for falling interest rates, and the expectation of a subdued but stabilising economy.
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Here is a round-up of what lies ahead in 2024 for financial advisers:
Modest growth
Many economists agree the UK’s economic outlook for 2024 is less positive than they would wish.
Gross domestic product fell 0.3 per cent between September and October, unexpectedly, after a 0.2 per cent expansion in the previous month. Economists had expected no change in the quarter.
KPMG expects GDP to continue to grow at a modest pace of 0.5 per cent this year, and to reach its steady-state rate of about 1 per cent in 2025.
The International Monetary Fund takes a similar view on UK GDP growth and predicts it to be 0.6 per cent in 2024, down from a previously forecast 1 per cent.
The OECD expects growth to remain modest in 2024 and 2025, and forecasts UK GDP to grow by 0.7 per cent this year – down from 0.8 per cent.
But the Institute for Fiscal Studies is less optimistic, saying in a report in October that it believes the UK economy “remains stuck between weak growth on the one hand and the risk of persistently high inflation on the other”.
Headline inflation fell further than expected in November to 3.9 per cent, down from 4.6 per cent in October, and more than halving during 2023.
Quilter Cheviot head of fixed interest research Richard Carter says the latest figure means the Bank of England “faces a less daunting task” bringing inflation back to its 2 per cent target this year.
Interest rates currently stand at a 15-year high of 5.25 per cent and commentators have been cautiously optimistic about their future development, especially if economic growth falters.
But KPMG expects the central bank to start cutting rates only when it is confident that inflation is firmly on target. “That’s unlikely to happen before the latter part of 2024,” it states.
Indeed, BoE deputy governor for financial stability Sarah Breeden said in December that monetary policy would be restrictive for an extended period of time.
She said that while the economic outlook is improving, there is still hard work ahead to return inflation to 2 per cent.
The IFS too says falling inflation this year should not be taken as a “sign of complacency with respect to the inflationary risks”, adding in a report in October: “The focus now is more how far price growth can fall back through 2024 – ie, whether inflation makes it from 4 per cent to 2 per cent, and whether it does so sustainably.”
