Green Shoots Of Spring?

As we enter a new decade, the global economy seems to be precariously balanced. Although recent data supports this pessimistic prognosis, forecasters suggest 2020 is set to observe a recovery.

Global growth rates

Gross domestic product (GDP) data for the third quarter of 2019, highlighted a continuing decline in global growth. In the US, GDP grew at an annualised rate of 1.9%, just below the 2.0%  recorded in the second quarter. China’s growth rate of 6.0% was the country’s slowest in over 27 years. While both the UK and German economies experienced growth in the third quarter, neither economy particularly flourished. The UK recorded its slowest annual rate in nearly a decade, while the German economy grew just 0.1% in the third quarter. Both economies were successful in avoiding consecutive quarters of negative growth – the ‘technical’ definition of recession.

Trade traumas weigh

Published in mid-October, the International Monetary Funds (IMF) World Economic Outlook, outlined the global economy is growing at its slowest pace since the financial crisis. They downgraded the 2019 world growth forecast to 3.0%, a 0.3 percentage point reduction from the April estimate. The bi-annual Outlook cautioned that the self-inflicted wounds of the USChina trade war had created a ‘precarious’ economic situation.

Cautiously optimistic

The IMF predict that growth will pick up this year, forecasting that the world economy will expand by 3.4% in 2020. Global trade protectionism and geopolitical tensions remain primary risks to the outlook going forward. The estimated pickup reflects projected improvements in the economic performance in several markets, developed and emerging. Considering the uncertainty surrounding prospects for many of these countries and prominent risks, it is possible that a more subdued pace of global activity could emerge.

Pension Allowance Breaches Surge

HMRC data has revealed a significant increase in the total value of pension contributions exceeding the annual allowance, with more and more people falling foul of the complex rules and  regulations.

The latest personal pension statistics, which cover 2017/18, show a staggering 26,550 people reported contributions exceeding the £40,000 annual allowance in their self-assessment tax return, with combined total contributions amounting to £812m, an average of £30,584 per person. Furthermore, over the past decade, the number of individuals reporting such a breach has risen dramatically, with just 230 people facing similar tax charges in 2007/08 when the annual allowance was £225,000.

Pension complexity

The sharp rise in breaches can largely be blamed on a big reduction in the annual allowance in 2011 and the introduction of the tapered annual allowance in 2016, which added even greater complexity to the pension landscape. Indeed, unless government heeds industry advice and significantly simplifies allowance rules, the next few years are likely to see even more people caught out by the overly complex regime.

Here to help

As many people are discovering, a breach of allowances can be extremely costly. It’s therefore imperative to seek professional advice if you are unsure how pension allowances impact on you. And remember, we are always here to help.

 

Financial Resolutions For A Prosperous New Year

The New Year period is a common time for people to take stock of their finances and make resolutions designed to boost their financial wellbeing. And a new study has found the likelihood of success in this area is heavily linked to receiving professional advice and the establishment of clear financial objectives.

Advice is key to success

The recently released research1 actually provides a quantitative measure of the value attributed to advice when it comes to helping investors achieve their goals. The US study was based on real-life data relating to more than 100,000 advised investors and found that eight out of 10 with a defined retirement goal had at least an 80% greater probability of achieving their financial objectives. In
other words, advised investors typically hit 80% of their financial goals.

Create a financial plan

The research vividly demonstrates how taking expert advice and constructing a Financial resolutions for a prosperous New Year tailored plan can significantly boost an investor’s financial wellbeing. In many ways this is unsurprising, as the benefits associated with financial planning are wellknown and plentiful.

Financial wellbeing

Discussing your financial objectives with us enables you to consider exactly what you want to achieve with your assets and thereby establish clear goals that are both realistic and achievable.  Regular financial reviews provide opportunities to monitor progress and adapt plans where necessary. Good financial planning also ensures all investments are tax-efficient by minimising both current and future tax liabilities.

It’s good to talk

This study once again reiterates the significant value that can be gained from seeking professional financial advice. So, if your circumstances have changed or the New Year has encouraged you to refocus your financial objectives, then get in touch. That way you can be sure your financial goals remain realistic and you give yourself the best chance of turning any New Year financial resolutions into reality.

Source – Vanguard, September 2019