UK Equities Opportunities in 2025: Expert Insights from Copia Capital
As we wrap up another whirlwind year, it’s hard to believe how much has happened in both the markets and the world at large. In the past 12 months, we’ve seen plenty of ups and downs, with political turmoil often taking the spotlight. Looking ahead to 2025, all eyes are on the UK’s Autumn Budget and the potential re-election of Donald Trump in the US.
Taking stock of where we are right now, one standout change from 2023 is the diversification of market performance. While the US continues to dominate headlines, other regions like the EU, Japan, and Emerging Markets have shown signs of life. Even here in the UK, equity performances have been compelling, especially in sectors that were previously stagnant. Corporate bonds, in fixed income, have also been making a strong comeback.
Looking back at 2024, it’s important to note the central bank base rate cuts happening worldwide, except in Japan. At Copia, we anticipate this trend to continue into 2025.
One significant event this year was Rachel Reeves’ eagerly anticipated budget announcement. While much attention was focused on oddities like Jeremy Clarkson’s farm under the IHT regime, the increase in employers’ National Insurance contributions from 13.8% to 15% could have a more substantial impact on 2025. The looming question is how businesses will react – will they freeze hiring or even cut jobs to save costs, or will they pass the burden onto consumers through higher prices, potentially leading to increased inflation?
Despite the budget’s implications, the market outlook remains relatively stable. Unlike the chaos seen after Liz Truss’s mini-budget in 2022, recent events have not caused significant alarm, with only a modest sell-off in gilts.
Undoubtedly, the standout event of the year has been the re-election of Donald Trump. While it’s hard to predict his exact moves, it’s likely that economic growth will be a defining factor in his policies. Plans to freeze tax rates and reduce Corporate Tax could boost both individual incomes and business profitability. With talks of sector deregulation and expansionary fiscal policies, it’s clear that austerity is not a priority in the US.
The wildcard in this mix is tariffs. The best-case scenario is that they remain a negotiating tool rather than a fully implemented policy. As we navigate the year ahead, it’s essential to keep a close eye on these developments and how they may impact the financial landscape.
