The year 2024 was marked by elections, inflation, and rate cuts, but as we move into 2025, the focus shifts to Trump, tariffs, and taxes. With new governments in power in both the UK and the US, contrasting policies are being implemented. The UK’s policies seem to be impacting confidence and growth negatively, while the US is offering tax breaks and deregulation to American corporations.

The US stock market is expected to perform well in 2025, fueled by Trump’s pro-business policies, Federal Reserve rate cuts, and promises of tax breaks. However, there are concerns about potential inflation spikes due to Trump’s policies, particularly on immigration, which could have repercussions for US tech giants.

Analysts suggest that investors should pay attention to US stocks with high domestic exposure and attractive valuations, as they are likely to benefit from Trump’s policies. While the top companies in the S&P index are reaching new highs, there are fears of a market bubble due to high valuations.

Diversification is key to protecting investments in this uncertain market environment. UK stocks, in particular, are undervalued and offer opportunities for investors. However, the UK market has seen a trend of companies being taken over or delisted, signaling a lack of confidence.

On a positive note, researchers predict an increase in UK IPO issuance in the coming year, suggesting that not all hope is lost for the London market. Measures such as relaxing listing rules and incentivizing investment in undervalued domestic stocks are needed to boost the UK economy.

However, the UK economy faces challenges such as contracting GDP growth and falling employment numbers, attributed to tax hikes and government policies. Economists have revised growth forecasts downwards for 2025, citing the impact of the chancellor’s Budget.

Tariffs and trade wars pose a significant risk to the UK economy, with potential price increases across the board. The UK’s vulnerability to Trump’s threats depends on the implementation of tariffs and the negotiation of trade deals. Experts suggest that the UK should brace for the impact, focus on negotiating with the US, and hope for a depreciation of the sterling to soften the blow.

As we look ahead to 2025, uncertainties loom over the global economy. It is essential for investors to stay informed, diversify their portfolios, and navigate through the challenges that lie ahead. Wishing everyone a happy and prosperous new year ahead.