The biggest risks for 2013
While new year predictions are always something of a hit and miss affair, one thing is certain, says Merryn Somerset Webb - danger lies ahead.
"Pundits forecast not because they know but because they are asked." It's one of the quotes you have to keep in mind at this time of year as you make your way through the piles of ritualistic forecasts from the financial industry. Most people have no more idea of what might happen than you or I do. They only write lists of predictions because other people think it is in their job description.
Still, I'm pretty sure that it is in our job description too. So we have done our best in this issue.We have invited the best of the members of our regular roundtable to give their views on where you should invest (Japan, biopharma, US banks, Russia and quality mid-caps).
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And Matthew Lynn has run through a list of things you probably aren't expecting but should be HSBC leaving Britain, the financial industry leaving Edinburgh and the BBC leaving the embrace of the British state, to name a few.
We've also looked at some of the areas fund investors should consider and at the chances of another year of outperformance from the emerging markets. It all adds up to an awful lot of predictions.
But look closely and you will see that there are two major themes running through the middle of all of them fiscal drag and monetary expansion. Neither is new. We all know that one way or another we will end up paying more tax over the next decade.
It might be explicit in that rates actually rise one way or another. It might be a little more opaque thresholds not going up with inflation, tuition fees, or the auto enrolment of the low paid into occupational pensions, for example (this cuts their real income now and also their entitlement to benefits on retirement). But either way, given the debts across the developed world, fiscal drag is inevitable.
We also all know that politicians almost always take the path of least resistance so the odds of quantitative easing to infinity are high. We know it is coming in Japan, it is ongoing in America and Britain, and we can be almost certain it is close in Europe.
With that in mind we can also be relatively sure that, as in 2012, asset prices are more likely to be driven by government policies than corporate fundamentals. The biggest risks to your finances and your future in 2013? Central bankers and politicians. Again.
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NS&I cuts interest rates on two easy-access savings accounts – are they still worth it?NS&I has announced more interest rate cuts, just weeks after launching less attractive rates on fixed-term British Savings Bonds
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Hargreaves Lansdown shakes up fees in biggest change in 10 years – what does it mean for you?Hargreaves Lansdown is lowering its headline fee from 0.45% to 0.35% – but not everyone will be happy with the new fee structure, it’s been suggested.
