‘It has been quite the week: taking stock with Chris Bull of Kellands and Stephen Bell of Columbia Threadneedle’
A discussion with Steven Bell, the Chief Economist of Columbia Threadneedle.
To spend time hearing the thoughts of Steven Bell, the Chief Economist of Columbia Threadneedle, at any point in time is enlightening, but Kellands were fortunate to be joined by Steven several days after one of the most anticipated UK budgets in decades and on the eve of the US election.
Having access to industry professionals of Steven’s stature allows for Kellands to ensure that we maintain a strong grasp of the economic outlook and to understand the driving forces behind the decision-making processes of the investment houses who manage our client’s portfolios.
Steven was joined by Chris Bull, a Kellands Chartered Financial Planner, who provided context on how economic and fiscal events are likely to impact private individuals and business owners from a financial planning perspective.
Chris Bull of Kellands
There were three main areas of discussion, some of which provided reasons to be positive and others that will split opinion.
The US Election
The morning after the event Donald Trump became the 47th President of the United States of America, with the Republican party completing a clean sweep of the Presidency, the Senate and the House. Such a clear and resounding victory has given President Trump more power than he held during his first term in office.
From a UK economic perspective one of the main focuses will be on the proposed new import tariffs that President Trump has proposed, which include a minimum 10% tariff on all imports, this percentage then increases dramatically for imports from China and imports from China via Mexico. This will likely have a negative impact on world trade, with the rest of the world potentially responding in kind. However, in the short period of time that has followed the election results, US markets have reacted positively.
World Economic Outlook
This is obviously an ever-changing landscape, but overall, the lead indicators from the UK, Europe and the US are positive.
Inflation has reached far more normalised levels, which in turn will lead to falling interest rates and this will be hugely beneficial to both homeowners and business owners.
The US and UK have so far avoided a recession, and although the EU has by many metrics suffered a mild recession, all three economic areas have managed to retain historically low levels of unemployment.
In the US consumer confidence remains strong, in the EU retail sales show that consumers are beginning to spend again after several difficult years, and in the UK house prices are projected to continue to recover.
The UK Budget
Despite all the leaks and rumours in the lead up to the first Labour budget since 2010, the official announcement still managed to throw up some surprises. The biggest talking point from a purely economic perspective, related to the increase in employers National Insurance Contributions. The increase that the government have announced, result in by far the largest increase in tax revenue.
The government are attempting to walk a tightrope between increasing tax revenue to help fund much needed improvements to public services, whilst trying to encourage growth in the economy. The increase in employer National Insurance Contributions has been seen by many business owners as a hinderance to growth and one that will ultimately be felt negatively by employees.
Gauging the mood in the room amongst various professions and business owners, there is meaningful concern about the ability of certain businesses to absorb the extra burden. Companies with a lower paid workforce will feel squeezed.
From a financial planning perspective, arguably the biggest change for our clients, concerns pensions being brought into the inheritance tax regime. A major rule change, that is due to come into effect from April 2027. The change will impact financial planning strategy, and further increase the need for financial advice.
Whilst an unwelcome development from the Budget, there is time to consider and adapt where appropriate. It will certainly be a key focus for our advisers when conducting client reviews.
The content of this summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.
While we believe this interpretation to be correct, it cannot be guaranteed and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement. Kellands (Hale) Limited is authorised and regulated by the Financial Conduct Authority. FCA Firm Reference No. 193498