Tuesday, May 9, 2017
At home and abroad
In uncertain times, at least the election industry tends to do well! Here we take a look at political headlines in France, the US and the UK
Macron on the march
On Sunday the French public chose Emmanuel Macron as their President. The result was unambiguous – Macron’s rival, former Front National leader Marine Le Pen, managed about a third of the vote.
But it was still a surprising election, with Jean-Luc Mélenchon (endorsed by the French Communist Party) only a few percentage points behind Macron in the first round; and no candidate of the traditional left- or right-wing parties making it through to the runoff.
Relatively little is known about Macron, who describes himself as ‘neither right nor left’ and has never before held elected office. However he seems committed to the European project.
It will be interesting to see how many seats En Marche! – the party set up by Macron a year ago – are able to secure in the French National Assembly, with elections in a month.
Trump's tax plans
In the US, recent headlines have focused on President Donald Trump’s tax policy.
Independent investment economist Peter Stanyer comments:
'In 1981 President Reagan introduced his then far-reaching reform of US federal tax policy, which ran to three volumes and 500 pages. All now agree the tax code needs simplifying again, and a fortnight ago President Trump announced his proposals.
'They were spelt out on one page of legal (a bit smaller than A4) and in effect are a ‘wish list’ for Congress to chew over. As they stand they are incapable of quantifying, due to insufficient detail – for example, there are no suggested thresholds for paying income tax. However, they indicate a substantial increase in borrowing. This will fall foul of the federal government debt ceiling, which needs lifting imminently.
'The bullet points repeat Trump's election pledges, but do not indicate how the funding circle will be closed other than through ‘faster growth’ (another election pledge). The stock market wasn’t impressed!'
The Brexit election?
Of course we have our own rough waters to navigate, with the upcoming general election. One consequence of this is that some elements of the Finance Bill have not gone ahead as planned. These include:
- Changes to probate fees
- The cut to the dividend allowance (from £5,000 to £2,000, effective April 2018)
- The reduced Money Purchase Annual Allowance (from £10,000 to £4,000)
The government says it’s committed to making these changes – we’ll have to wait and see. But it looks like the 2017 Autumn Budget could be very significant!
What should you do?
As ever, we’d advise against trying to guess what might happen next, and in particular looking to profit from the unwinding of various ‘unknowns’. Our approach is to focus on what you can control, and that means taking a long term view.
Of course investment portfolios will change over time. But hopefully that will be in response to your changing goals and personal circumstances – not what’s in the newspaper!