Good morning from Paul & Graham!
Everyone still digesting the consequences of the Budget, I expect. I emphasise that this is a time for people to be taking professional advice from authorised financial (tax & pension, etc) advisers, for estate planning, etc, before making any changes, as it's already become clear that some of the IHT changes are complicated and have created some uncertainty.
In terms of shares, I think we should now see a wave of broker forecast cuts, because I don't believe that hefty extra wages costs (hike in minimum wage of 5%-16% in April 2025, and increased employers NICs from the rate going up and the threshold coming down) are likely to be already factored into forecasts. Hence why, for me anyway, retail & hospitality are out of my portfolio altogether for the time being until the dust has settled. Plenty of other companies are also likely to need to cut forecasts due to higher wages costs as other workers press for differentials to be maintained. Mitigation measures can soften the impact, but tend to take time to implement.
Looking for positives, I think the removal of uncertainty now allows many companies and individuals to press ahead with expansion or purchasing plans that might have been put on hold. Also the OBR says that the big increase in Govt spending will boost the economy, at least in the short-term. I'm toying with the idea of buying shares in the staffing sector, and building supplies sector, as this could be the turning point where the first signs of recovery might, just might begin to appear possibly?
Also I suspect that there's lots of investing cash on the sidelines, and with AIM losing half its IHT relief, and ISAs untouched, this could have been a lot worse. So I reckon conditions are now set up for a potential autumn rally in UK small caps - there we are, a bold prediction! This time of year is exactly when small caps began powerful rallies in several recent years.
Explanatory notes -
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