Predictions for 2014
Weather forecasters could do a reasonable job for any one day looking at what happened on the same date last year and predicting the same. It works for more days than it fails.
Reading the runes in the world of money is far tougher. The past is a very unreliable guide to the future – there are always “events” which are unforeseeable and unforeseen to derail even Nobel economics prize laureates. That's why investments come with so many warning paragraphs. So with that disclaimer, here's some 2014 crystal ball gazing.
Whether the economy is really improving or it's all a London-centric house price driven bubble, consumers (although not all) should feel better over the coming year – they may even splash out on those easy to put off items such as new furniture or a replacement car after years of holding back and making do. Those lucky enough to have substantial sums in savings could start to spend – major home improvements such as kitchens, bathrooms and extra rooms are likely to see increased demand. Football's World Cup should see sales of larger and smarter televisions increase and with England's first game at 2am, sales of caffeine-based drinks will probably soar.
High Street Trends
Shoppers will be lucky to find anywhere on the high street that will still take a cheque.
We'll be buying more online – if only to use all those tablets that we received at Christmas. Stores will find more methods of delivery such as collection points in commuter stations car parks and post offices. But Amazon's plan to deliver parcels by drone almost certainly won't happen – it's too dangerous, too costly and was probably an April Fool's joke which was sent out late.
Shoppers will be lucky to find anywhere on the high street that will still take a cheque. Other than for large transactions, these are destined to go the way of postal orders. Contactless transactions will probably remain low while attempts to turn mobile phones into all powerful wallets will only take off slowly due to consumer fears of “putting it all in one basket” and wondering how to survive if/when the battery fails.
House prices overall are set to continue to rise but the pace should slow as the year progresses. At the same time, the increases are likely to be spread more evenly across the UK as values in the most expensive parts of London reach pain point even for those with millions – the tightening of capital gains tax and stamp duty rules for overseas buyers plus lower prices in Paris and New York should help put the brakes on. Mortgages will probably cost more as the cheap money lenders have relied upon runs out – another reason for property price moderation. Those renting are unlikely to see any respite in their monthly outlay but they can expect more campaigning aimed at evening the relationship between landlord and tenant.
This will be a pre-election year so expect some sweeteners, mostly aimed at average and below average earners with gains here clawed back from those with higher pay packets. The better off should not hold their breath for generosity.
Your savings and investments
After another rotten year for bank account savers - it's almost impossible to find an account that even matches inflation after tax – rates should nudge gently upwards by the end of 2014. But we are still a long time away from the long term “normality” of five per cent. Those risking cash on stock markets have had a great 2013 with the United States hitting all time highs, Japan gaining more than 50 per cent and London-listed shares up a respectable ten per cent plus. These gains are unlikely to be repeated in 2014 but there should be some progress rather than a substantial setback – the stock market believes that “good years follow great years”.
Two unknowns are whether China will sort out its economic problems and make its population, rather than just exporters, better off and whether social media stocks continue to do well. There's always the chance of a new trend which could blow established names with hundreds of millions of fans out of the water in a short space of time.
Overall..........We've will have had seven bad years since the start of the banking crisis in 2007. If seven good years is too much to expect, most people will happily settle for seven better years.