The experts speak! Financial predictions for 2019

Brexit, currency wars, challenger banks and rising interest rates – according to the experts, any one of these factors could make or break your savings and investments. As 2019 begins, the nation’s top financial analysts have shared their financial predictions for 2019.

So before you make any major money decisions this year, read on and find out what the experts think…

1. The stock markets won’t rise

“2018 proved to be a challenging year for investors and many investors predict more of the same in 2019,” said Tom Stevenson, investment director for personal investing at Fidelity International.

“While there may be little prospect of markets rising strongly over the next 12 months, in the absence of recession (which is unlikely, I think), and with valuations far from stretched, there is no reason to expect a meaningful correction either. The fourth quarter volatility has created some compelling value in a number of markets.”

2. The pound will become more valuable

“The pound is currently in the bottom quartile of its 10-year range, with the currency put through the wringer again recently with the latest round of Brexit twists & turns,” said Aegon’s investment director, Nick Dixon, while giving his financial predictions for 2019.

“Despite significant ongoing uncertainty around Britain’s exit from the EU – including the possibility of ‘no deal’ – we are entering the Brexit end-game with all sides seeking an amicable and economically sensible deal. An agreement remains the most likely outcome. This will provide greater trading certainty, higher confidence in the UK, and hence higher value for the pound sterling.”

3. Challenger banks will offer the best savings rates

“There are a number of banks in flight on their way to market and I expect 2019 to see a strong number of new entrants,” said James Blower, founder of the Savings Guru.

“Zopa have just been awarded a banking licence, with restrictions, so I expect their full market entry to happen late in the summer. Zopa has been hugely successful at attracting ‘investors’ to its peer to peer platform and I expect it to be attractive to savers with competitive rates.

“VW Financial Services could well join the market in 2019 too. Other banks expected to launch in 2019 include Recognise Bank and DF Capital. Overall, 2019 is likely to see five or six new entrant banks during the year.

“This is great news for savers because it is competition from the new entrant banks which is driving the increase in interest rates on savings that we’ve seen through 2018, with rates up around 0.2 – 0.25 per cent in just about every product category.”

4. Gold will be back in fashion

“One market that continues to shine is gold,” said David Jones, chief market strategist at Capital.com.

“The precious metal has gained by around 10 per cent since the August lows and, with other markets continuing to be rocked by uncertainty, gold could well continue to appeal to investors looking to trade in a possibly less volatile market.”

5. The base rate will rise

“We expect just one interest rate hike in 2019 followed by two in 2020 – taking rates up to 1.5 per cent,” said Howard Archer, chief economic adviser to the EY Item group.

“We see a further two interest rate hikes in 2021, causing them to be at two per cent at end-2021.”

6. There will be a second Brexit referendum

“The pressure will rapidly mount further for a second referendum, something which on the basis of it being democratic will be hard to resist,” said Richard Stone, chief executive of the Share Centre.

“That second referendum will likely be won by Remain if it is a choice between Theresa May’s deal and staying in the EU – our own research amongst our customer base of personal investors suggested a 54/46 majority for Remain in those circumstances even though, as in the country as a whole, a majority of those personal investors voted Leave in the original EU referendum in 2016.”

Kathryn Gaw

Kathryn Gaw is a financial journalist based in Belfast, Northern Ireland. She has been writing about personal finance and investment trends for more than a decade, and her work has been featured in the Financial Times, City A.M., the Press Association, and The Irish Independent, among many other publications.