18/01/2016 by David Gibbens, Director, Poole Waterfield
A bit chilly
The time of year has come around where I tentatively guess at some of the things that may lie ahead for business in the coming twelve months. As all the best weather forecasters say, the general synopsis is changeable.
The economic climate is turning a bit chilly, with disappointing growth in the far east and the Chinese bubble appearing to show signs of deflating. China has been a huge factor in the world economy for well over a decade and the markets won’t respond well to concerns there.
There are also clear indications that the price of oil is set to drop to levels not seen for twenty years. For the UK and other oil importers this should be a good thing: you would expect prices across the board to drop as a result, but it also shows instability in a key market and it will have varied affects across the globe.
UK companies exporting to the oil rich states may find a downturn and important developments in other energy resources may become less attractive. Ultimately it is likely to be a relatively short lived phenomenon, oil supplies will be limited to match demand until the price returns to a higher, and possibly much higher, level.
UK's place in Europe
Given that background it would be surprising if inflation was a concern in 2016 and interest rates seem likely to remain at the 0.5 percent we have become so accustomed to.
The vexed question of the UK’s place in Europe remains firmly on the agenda for 2016, although whether this will be the year of the “In - Out” referendum remains to be seen. Most commentators seem to think that a date in 2017 is more likely.
Turning to more domestic matters George Osborne’s Autumn Statement was something of a non-event in terms of tax changes. The 2015 Summer budget had all tax professionals reaching for the aspirin and by general consent there needs to be a period of settling in with the raft of changes that introduced. The Chancellor is bound to spring a few surprises though, but hopefully they will be kinder to businesses than some of his recent changes have been!
Closer to home, the midlands manufacturing base, particular the automotive sector, has been at the heart of the recovery, with some great success stories. Whether that is set to continue in 2016 is anyone’s guess, but I suspect that the dip in fortunes some manufacturers experienced in 2015 are set to continue and a more patchy overall picture will emerge. There will, as ever, be winners and losers, but my guess is that high tech and research based companies will outperform more traditional manufacturing.
Whatever the next year does have in store for business, tax and the economy, I wish all Poole Waterfield clients and friends a happy, healthy and successful 2016!
Category: David Gibbens Blog Author: David Gibbens, Director, Poole Waterfield