December Market Eye from Prest Financial

In his recent Autumn Statement the Chancellor increased the personal Income Tax allowances as part of the objective to eventually equalise them with Age Allowances. Corporation Tax rates will be reduced by 2% from 1 April 2014. He also announced that the pension drawdown income limits will be increased at some point in future but he will not be removing the link to Gilts in the calculation of the maximum income.

This is the season of forecasts for the NewYear and the consensus seems to be that world economies will improve slightly.This should have a positive effect on share prices but not enough to cause a fall in Government Bond prices as inflation is expected to stay low. However, the Chancellor has reduced his forecast for growth in the UK economy and confirmed the austerity measures will continue.

The FTSE100 climbed up from 5,769 on 9 November to 5,914 on 7 December.

Housing data from the USA is positive with more new housing starts and house price increases for six consecutive months.

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