After a year of elections, global conflicts, and market volatility, UK consumers are heading into 2025 with a degree of trepidation. There’s a large amount of uncertainty too.
While an Ipsos survey reveals that 57% of Brits anticipate a UK recession in 2025, almost half (48%), expect their financial situation to improve.
Keep reading to discover what the experts are saying about the coming year, why it pays to be wary of such predictions, and how you might opt to remain focused on your long-term goals.
The stock market experienced notable volatility in 2024
The stock market in 2024 presented opportunities and challenges. Certain sectors, particularly technology, saw remarkable growth, with the Motley Fool revealing that:
- NVIDIA rose by 171.18%
- Meta Platforms rose by 65.42%
- Tesla rose by 65.52%.
Elections shaped markets considerably, most notably in the US. Following Donald Trump’s re-election, Fidelity reported that the S&P 500 enjoyed what is now being referred to as the “Trump bump”, with its best week in a year, rising by nearly 5% over five days.
The so-called “August sell-off”, meanwhile, was a reminder of just how volatile markets can be. The Associated Press states that Japan’s Nikkei 225 suffered its largest single-day decline in 37 years. According to the Guardian, meanwhile, 5 August saw the S&P 500 endure its worst trading day in nearly two years.
Experts remain cautious, yet optimistic, about 2025
Forecasts for 2025 are varied, highlighting the difficulty of making predictions of this kind.
Goldman Sachs predicts that the S&P 500 could reach 6,500 this year, representing a 9% gain but falling short of the 26% growth seen in 2024.
Meanwhile, Wells Fargo’s upper-end target for the S&P 500 rose from 6,400 to 6,700, anticipating a negative – albeit delayed – response to Trump’s trade tariffs, noticeable from 2026.
In the UK, optimism appears to be rising. Motley Fool reports that 66% of market experts predict that the FTSE 100 will close this year higher than the last. The Economic Forecast Agency supports this sentiment, predicting that the FTSE 100 could reach around 9,900 points by December 2025 – a 21% rise from its levels in November 2024.
Inflation and the base rate decreased over 2024
Throughout 2024, inflation showed promising signs of cooling, with the Office for National Statistics reporting that the Consumer Prices Index (CPI) fell from 4% in the 12 months leading to January 2024 to 2.6% by November of the same year.
The base rate – which the Bank of England (BoE) uses as a tool to keep inflation in check – also saw similar decreases. The BoE reveals that the base rate fell from 5.25% in January 2024 to 4.75% by November.
The British Chambers of Commerce forecasts further easing of inflation in 2025, potentially reaching 2.2% by the final quarter of 2025. This is only slightly higher than the BoE’s target of 2%.
Similarly, base rate predictions also remain positive, with Morningstar revealing that most experts anticipate several cuts throughout 2025 as economic conditions continue to stabilise.
A declining base rate might reduce the appeal of cash savings, particularly if the banks follow suit and drop their interest rates, potentially prompting you to consider typically higher-growth investments. If you hold a mortgage, though, lower rates spell good news.
No matter what happens, it’s vital to stay focused on the long term
Whatever 2025 brings, remember that it’s often best to ignore the short-term noise and remain focused on the long term. This should help you to remain unemotional and avoid knee-jerk reactions.
On this point, Nutmeg states that if you invested money on a random day between January 1971 and July 2022, and held it for 24 hours, your chances of positive gains would be 52.4%. If you held this same investment for 10 years, the gain could be as high as 94.2%. So stay calm, stay patient, and stay invested.
Perhaps one of the more effective ways to maintain a long-term focus is by working with a financial planner.
At Globe IFA, we can assess your risk tolerance, long-term objectives, and capacity for loss, then use this information to offer bespoke advice aligned with your goals.
Get in touch
We can help you keep your plans on track whatever 2025 brings. Email hello@globeifa.co.uk or call us on 020 8891 0711 to discuss how Globe IFA’s expert financial advisors can stay focused on the long term.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
