What does 2006 hold for investors?

As the end of the year approaches, MoneyWeek editor Merryn Somerset Webb looks back at her predictions for 2005 - and makes some for 2006. Is this the year the US consumer finally folds?

I try not to make too many predictions at the turn of each year on the basis that the more I make the more stupid I am likely to look when the next year comes around. So I am pleased to see that looking back to my last column of 2004 I made only one: that 2005 would be the year that the UK consumer finally threw in the towel and that the retail sector would suffer as a result. Given the record levels of personal debt in the UK at the time and the fact that house price growth was already flattening, this wasn't the boldest call around but its always nice to be right and, so far, it seems I was.

According to the CBI, sales growth in November was the worst recorded for 22 years and shopkeepers' expectations for December were dreadful too. The sector has horribly underperformed as a result and, while it has picked up in recent weeks, I'd still be steering clear in 2006. I just can't see consumption recovering any time soon. The number of people claiming unemployment benefit in the UK has now risen for ten months in a row, we are starting to panic about our debts (we are actually paying back more than we are borrowing on our credit cards) and most importantly of all, house prices, the biggest driver of consumption there is, are at best flat and at worst falling.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.