Our 2017 Financial Predictions

While at gpfm, we’re not qualified to make accounting recommendations, we can take what the news has to say and make some potentially helpful comments. The shocks of 2016 will start to have an impact in 2017 – but how?

 With the shape of Brexit still uncertain, there is plenty of room for the start of negotiations between Britain and the EU to create further surprises, while the presidency of Donald Trump is unlikely to be predictable. And what about China and Asian economies – are there any opportunities there for savvy investors?

The UK economy is forecast to grow

The recovery from the 2008 global financial crisis and the impact of austerity policies began to get underway this year, with PWC putting average growth at around 2% this year[i]. Next year that will slow to 1.2% due to the uncertainties around Britain’s relationship with the EU[ii].

The weaker pound and rising oil prices means inflation will probably rise but so far it hasn’t gone up by as much as many had thought it would, and is likely to push beyond 2%[iii]. Could it hit 3% by this time next year?[iv]

The chancellor’s infrastructure spending plans, including a big housing program, may also start to filter through. Estate agents say house prices will rise, but in London and the southeast that seems less likely. The top end of the housing market is down by more than 5% in London[v], but in Hertfordshire, home owners are still seeing rising prices[vi].

US interest rates will rise

President-elect Trump has promised a lot – what he delivers remains to be seen, but it’s likely to include tax cuts for corporations. US economic tipsters believe Americans will max out their credit cards and carry on spending, so get ready for further US interest rate increases, probably up to 1.125% and maybe 1.25%[vii]. That means a stronger dollar – putting further pressure on sterling and oil prices – and a possible consumer-led mini-boom. Having said that, forecasts for growth are modest, with the US economy likely to reach 2.1% and the stock market is not likely to see big gains[viii].

In Asia, things are looking up

China has been the fuel tank feeding the US engine that drives the global economy for some time, and the end of 2016 was showing encouraging signs for China-watchers. The demand for products in the US is likely to create significant growth with some expecting it to hit 6.6% and possibly more[ix]. This is not all consumer-oriented manufacturing, although energy is likely to be a big driver of the Chinese economy – banking and insurance are other areas that will see growth, according to Bloomberg analysts[x]. That is good news for Australia and African countries with strong natural resources.

Europe could go either way

Germany’s economic outlook has been affected by the Brexit vote, with this year’s higher growth rate unlikely to continue into next year[xi]. While European economies have less at stake over Brexit, a bad deal or fractious negotiations are likely to govern how they fare next year.

2017 is set to be a curious year for people around the world. In Hertfordshire and beyond, our Chartered financial planners can help you achieve your financial goals – whatever the circumstance. Contact us today.

This article is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions. 

 


[i] http://pwc.blogs.com/press_room/2016/12/pwcs-economic-predictions-for-2017.html
[ii] http://www.independent.co.uk/news/business/news/european-commission-slashes-uk-2017-growth-forecast-in-half-a7407136.html
[iii] http://www.bbc.co.uk/news/business-37860880
[iv] http://www.ibtimes.co.uk/bcc-forecasts-uk-economy-grow-1-1-2017-weakest-gdp-growth-since-financial-crisis-1595975
[v] http://www.ibtimes.co.uk/house-prices-prime-central-london-shock-fall-nearly-5-says-knight-frank-1595127
[vi] http://www.hertfordshiremercury.co.uk/house-prices-hertfordshire-highest-east-england/story-29145097-detail/story.html
[vii] https://wallethub.com/blog/2017-predictions/30326/
[viii] https://www.wsj.com/articles/u-s-gdp-grew-1-9-in-fourth-quarter-1485524015
[ix] https://www.bloomberg.com/news/videos/2016-12-30/standard-chartered-see-china-growth-at-6-6-in-2017
[x] https://www.bloomberg.com/news/videos/2016-12-30/standard-chartered-see-china-growth-at-6-6-in-2017
[xi] http://www.dw.com/en/germanys-tanker-economy-to-stay-course-in-2017/a-36924181