UBS dissects the UK financial system into 2025

Investing.com – UBS appears to be like ahead to the brand new yr from the attitude of the UK financial system, having rounded up the present yr.

Regardless of many forecasts on the contrary, the nation “survived” the election and the ushering in of the primary Labour authorities in 14 years, anal;ysts on the Swiss financial institution stated, in a be aware dated Dec. 16.

“For UK traders, the information hasn’t been all dangerous both. To make sure, the UK market has underperformed the US, which has benefited from a lot larger publicity to fast-growing technology-focused sectors. However the FTSE has nonetheless returned over 7% this yr, which, whenever you add the market’s wholesome yield, rises comfortably into double digits,” UBS stated.

Gilts haven’t benefited from falling charges as a lot as we hoped, however an investor in a 5-year gilt this yr wouldn’t have misplaced a lot, whereas even the pound hasn’t finished as badly as many thought it might. 

There are a couple of ideas that may be taken ahead into subsequent yr, the Swiss financial institution added.

“But once more, the temper within the UK is seemingly glum, helped in no small half by the long-awaited funds. It will be arduous to provide you with a funds that was much less growth- and investment-friendly, however that stated, the spending that was introduced ought to assist the financial system develop subsequent yr. So, deciding to not make investments for fears of a recession is prone to be as profitable a technique subsequent yr because it was this,” UBS stated.

The lesson we should always all take from this yr is to comply with what politicians do, not what they are saying. Investing primarily based on marketing campaign pledges would have finished extra hurt than good in 2024.

“Lastly, don’t confuse the market with the financial system. The UK financial system ought to do okay, but it surely gained’t be the perfect on the market. However that doesn’t imply that the FTSE, with its focus in different elements of the world, can’t ship constructive returns, particularly when taking into consideration dividends,” UBS added.

Rates of interest will fall, though possibly much less shortly than in different areas, so getting money to work is prone to be the precise technique in 2025, because it has been this yr.