Positive thinking from Brewin Dolphin for 2013
Jamie Matheson, Executive Chairman of Brewin Dolphion announced at the end of last year that despite extreme economic uncertainty at home and abroad, 2012 will largely be remembered as a year of better news for investors.
According to Brewin Dolphin's Group Strategist, equity markets have a sound backdrop for further gains next year and most markets have the potential to see around 10% earnings growth - he is predicting that the FTSE 100 will reach 6350 in 2013 - which is welcome positive thinking.
However, continues Matheson, the road for 2013 remains uncertain. "The journey towards growth continues to stagger and savers are feeling the effects of flat interest rates and squeezed incomes.
"George Osborne’s latest decision to target tax-relief on pensions is yet another poor signal to savers and makes planning for the future even more difficult to predict. Whilst most recognise tough-decisions are required, short-term gains must never take precedence over long-term planning.
"Yet, there remains an unhealthy short-termist culture within much of the financial sector We at Brewin Dolphin endorse the development of a savings culture within the UK with a long-term approach to investment. Yet the landscape in which we operate is making that less conducive, choosing instead to reward the gamblers over the investors. This cannot be the sensible way forward and does not create a path to prosperity."
According to Matheson, we need a tax system that rewards savers over the day traders. "The current system works completely in reverse: where investment in equities by private investors and pension funds is subject to 0.5% stamp duty, while CFD trading is tax free.
"Saving for the future requires long-term thinking and expertise, not the instincts of a short-seller out to make a quick buck. So we believe the taxes raised from stamp duty on equities should at least be spread more thinly across other financial instruments with fewer social benefits.
"Savers and investors will be facing a range of issues in 2013. Some will suffer the loss of child benefit and be worse off by the equivalent of £6,000 earned income. While others will be trying to salt away £50,000 and mop up any previous years' allowances before the pension rules change again in April 2014. So in general we expect a sense of thrift and careful financial planning to continue for the foreseeable future.
"Entrepreneurs and businesses, too, need to adopt a more long-term approach. Presently the tax breaks for debt finance are more generous than for equity. This would be a major culture change in the UK, but one that cannot come soon enough. So the consultation announced in the Autumn Statement that there will be discussions about allowing AIM stocks to be held in ISAs, is a good signal that this principle is at least acknowledged.
"At Brewin Dolphin, we recognise that 2012, our 250th year, has been a challenging one for the business, and the coming few may continue to test our sector. However, we believe the glass is more than half full and are reassured by the long-term business model that we serve. We strongly believe that the best is yet to come for us, our clients and the country."
Head of Brewin Dolphin in Exeter branch Tim Walker said, "It has been another difficult year for the economy but the markets have held up very well and we are pleased to have made good progress in branch and contributed to the Group's increased profits and increased funds under management. The industry is going through some significant changes and both my colleagues here and our clients are managing this very well. I believe we are set fair to grow the business in the coming year.”
