MoneyWeek's five predictions for investors in 2025

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published 6 January 2025

MoneyWeek's City columnist gazes into his crystal ball and sees five unexpected events in store for investors in 2025.

1. M&S merges with John Lewis

The two great retailing temples of Middle England have reversed places in the last few years. For most of the 2020s, John Lewis, along with its Waitrose grocery unit, expanded at a furious pace, while M&S stumbled from crisis to crisis. In the past few years, it is John Lewis that has been in trouble, racking up huge losses and cancelling bonuses for staff. Meanwhile, M&S has revived and is making money again, and its shares have risen by 40% over the last 12 months. John Lewis has already discussed the possibility of bringing in outside shareholders for fresh capital and expertise. Why not go a step further and merge with M&S? Together the two would dominate the middle market, middle-aged clothing and homeware, and the M&S Food stores would complement Waitrose’s supermarkets perfectly. It is hard to think of a more natural fit. Call it Marks & Lewis.

Chancellor Rachel Reeves faced a series of appalling figures in the run-up to the new year. GDP fell for the second month in a row. Job vacancies were collapsing at the fastest pace in almost a decade. And inflation was rising again, spiking up to 2.6% in November. The downturn is almost entirely attributable to Reeves’s catastrophic mismanagement of the economy. By overdramatising how bad her inheritance was, she shattered business and consumer confidence, then imposed punishing tax rises that hammered some of the most vulnerable sectors of the economy. Her pledge to make the UK the fastest-growing economy in the G7 now looks laughably ambitious and she will need a sustained recovery by the spring. It is not going to happen. No government can survive with a joke of a chancellor. By the summer, Keir Starmer will have no choice but to fire her. Wes Streeting will step up.

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When Donald Trump moves into the White House, most experts are predicting a long and bitter trade war with China. A simpler outcome is more likely: China will surrender, placating Trump with major concessions. China’s growth is weakening and its population ageing. A trade war might easily be lost and would risk the gains of the past 40 years. By cutting exports, boosting domestic demand, allowing US firms full access to its market and leaving Taiwan alone, China could secure peace. It would be a deal worth doing – and would send the Shanghai stock market soaring.

Talks between Honda and Nissan over a possible merger underline that this is probably the only way the two Japanese auto giants can ensure survival as the market switches to electric vehicles. But the German industry is in even worse shape. Volkswagen is looking at closing factories for the first time in its history, while Mercedes is struggling to make anything like as much money on its battery-powered vehicles as on its petrol and diesel cars. The solution? The two companies should merge, creating a business with the scale to take on Tesla and the new Chinese EV makers, while retaining its strengths as a car manufacturer. Once that was completed, it could take over BMW as well, creating a German national auto champion.

The number of companies quoted in the City has been declining for years, falling by 25% over the last decade. A whole series of major businesses have shifted their main listing to New York. It’s not hard to see why. Valuations are higher, there are many more investors, and the regulations are not quite so burdensome. New listings have fallen to a 15-year low, and London now ranks below Oman and Malaysia for IPOs. With Trump deregulating the New York market, London is likely to fall even further behind, and the Labour government won’t do anything to reverse the steady decline. But there is a solution. The London Stock Exchange could simply move to New York, taking all the companies with it. At a stroke, there would be less regulation and plenty more investors.

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years.

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.