As we reflect on 2024, the global economy faced a year of shifting dynamics. Key themes such as AI, climate, energy, elections, ongoing conflict and global security dominated. Global fragmentation was also a prevalent theme identified at the Davos World Economic Forum in January, where United Nations Secretary-General Antonia Guterres commented, “Geopolitical divides are preventing us from coming together around global solutions for global challenges.”

With geopolitical instability posing a risk to global and domestic growth, the International Monetary Fund’s (IMF’s) most recent World Economic Outlook entitled ‘Policy Pivot, Rising Threats,’ outlines global growth expectations of 3.2% in both 2024 and 2025. Rate cuts are ‘poised’ to continue, inflationary pressures will ease, growth will be modest, while geopolitical risks ‘remain threats to global stability and growth,’ according to the Outlook.

Resilience in many regions has been a theme. The IMF’s report cites, ‘The global battle against inflation has largely been won, even though price pressures persist in some countries… Despite a sharp and synchronized tightening of monetary policy around the world, the global economy has remained unusually resilient throughout the disinflationary process, avoiding a global recession.’

In November, finance leaders and central bank governors from developed and emerging economies met in Washington to discuss the financial landscape, during which they issued a statement expressing optimism, ‘We observe good prospects of a soft landing for the global economy, although multiple challenges remain.’ Praising ‘well-calibrated monetary policies’ that have helped to control inflation, the finance professionals spoke about a joint commitment to resist protectionism to support fair and open global trade – a statement likely to be directed at the incoming US President.

Almost half of the world’s population voted in national elections in 2024. Incumbent parties generally performed badly, with some ousted, others forced into coalition and others cohabitation. Such a significant theme in the year, political transitions pose a challenge both globally and on home shores. Many of these elections have long-standing ramifications, not just for the electorate but also for reshaping global geopolitics for years to come.

The most significant election the world saw in 2024 was undoubtedly the US presidential election in November. Donald Trump made a triumphant comeback to be voted 47^th President, with the Republicans securing a decisive victory, (Harris 226, Trump 312) whilst also securing control of the US Senate and House of Representatives.

Key focuses for his administration will include trade and climate change policies, the war in Ukraine, tax and immigration, on which Trump has pledged to launch a mass deportation campaign. Concerns are heightening that his potential tariff proposals could ignite a fiercer trade war with China and US allies, while his plans to reduce corporate taxes and implement a variety of other tax cuts could propel US debt. Trump will be inaugurated on 20 January 2025.

Following weeks of intense campaigning, as widely expected, the Labour Party secured a landslide victory in July (LAB 412, CON 121, LD 72). New Chancellor Rachel Reeves’ maiden Budget in October created waves for individuals and businesses alike, during which she announced £40bn of tax rises.

Described as a ‘tough’ Budget for business, an increase in employer National Insurance Contributions from April 2025 brings an unwelcome cost burden. A significant personal finance announcement was that most unused pensions will be brought into a person’s estate for Inheritance Tax purposes from 6 April 2027, prompting a rethink of retirees’ decumulation strategies. The Chancellor expects 8% of estates will be impacted annually.

And from April 2025, the non-dom status will be abolished and replaced by a new residence-based system. The change marks a pivotal shift in the government’s approach to tax policy and is expected to raise £12.7bn over the next five years.

Did you know…

‘Manifest’ is the Cambridge Dictionary’s 2024 Word of the Year – defined as imagining achieving something you want, in the belief doing so will make it more likely to happen – Donald Trump and Keir Starmer succeeded in pursuing their political ambitions in 2024 – perhaps ‘manifesting’ played a part!

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. It is important to take professional advice before making any decision relating to your personal finances. This document does not provide individual tailored investment advice and is for guidance only.

All details are believed to be correct at time of writing – 04 December 2024.