Financial update France December 2023

Here we are already at the end of the year. 2023 has been a year of highs and lows, not for me personally or professionally, but in the markets. If you look at any of the main markets or indexes you can see that 2023 has been a challenging year for investors. Of course there are still several weeks left in December so it is too early to say how the year will end.

At the end of November the UK chancellor presented the autumn statement. Whilst much of this does not affect those of us in France, Mr Hunt did confirm that the triple lock would be maintained and the pension payment would increase by 8.5% in April 2024. If you are entitled to the new State pension you will get £221.20 a week from April. Those pensioners who qualified for their pensions before April 2016 will also see an increase from £156.20 currently to £169.50 per week. Unlike in the UK the tax bands in France have been increased for 2024 so this means that, subject to the exchange rate, pensioners in France will get more income but pay less taxes next year.

The Bank of England decided in November that it would not increase interest rates and would maintain it at 5.25%. Whilst this is unlikely to change in the medium term, with inflation falling to 4.7% in October, it has been no surprise to me to read in the UK press that many banks are dropping the high interest rate accounts that have been on offer over this past year.

Please remember that most companies and business owners have to pay CFE by 15th December. As the CFE is a local tax and the other local taxes like the taxe d’habiation and taxe foncière increased this year, it should come as no surprise if you find that your CFE has also increased.

As we head towards the end of the year there may still be some things you might want to consider doing to alleviate your tax burden next year. Tis the season for giving so if you haven’t already been making charitable donations monthly during the year or you want to make one off donations at this time of the year, you can deduct between 66% to 75% of the amount donated, depending on the status of the chosen charity, and up to 20% of your annual taxable income. Also, if you have a PER and are in a position to make a contribution to it before the end of the year, this is also deductible from your taxable income.

There was good news for those invested in the Pru as, at the quarterly review of the Expected Growth Rates on 27th November, there was no changes to the EGRs and no Unit Price Adjustments. This was welcome news since there had been three consecutive downward Unit Price Adjustments in the PruFund Growth Sterling fund in previous quarters.

Looking forward, I always like to remain positive and hopeful however I have learnt that it is also important to manage expectations. One of our product provides reminded me that there will be many countries heading to the polls in 2024 and that this is likely to cause turbulence and volatility in the markets.

The OECD predicts that “In the absence of further large shocks to food and energy prices, projected headline inflation is expected to return to levels consistent with central bank targets in most major economies by the end of 2025.” It further stated that whilst “Global growth is projected to be 2.9% in 2023, and weaken to 2.7% in 2024. As inflation abates further and real incomes strengthen, the world economy is projected to grow by 3% in 2025”. Of course, whilst these are based on careful analysis and good information, they are just predictions and as we have seen things often turn out better than most analysts ever predicted.

No matter what happens my job is to be there for my clients, to advise them on their investments and provide them with the proper information to help them make the right financial decisions so please do get in touch if you would like to arrange a phone call, video call or face to face meeting.

I shall be celebrating Christmas here in France and then New Years in the UK. There are still plenty of dates available for meetings before the end of the year but if I don’t speak to you before then I wish you all a very happy holiday season and all the best for the new year!