This is 2025: What happened to our finances and the economy this year

0:02Welcome to This Is Money podcast sponsored by Charles Stanley Direct. I'm Georgie Frost and joining me today is Simon Lambert for an end of year wrap up. We'll run the rule over the government's financial efforts this year, the good, the bad and the frozen. Plus the state of the economy. Interest rates continued to fall. Inflation proved sticky and growth has been pretty underwhelming. Better news for mortgage holders, but the property market remained sluggish. Not Like the FTSE, it's been a knockout year against the backdrop of an impending AI crash. Plus, another big compensation scandal rumbled on.

0:36Don't forget to stay up to date with all the latest breaking money news. Just go to thisismoney.co.uk or download the app. But first, a message from our sponsors. You've spent Christmas giving to others. Well, why don't you give yourself a gift? The gift of financial clarity with support from Charles Stanley Direct's Financial Coaching. Led by This Is Money regular Lisa Kaplan, financial coaching gives you access to a real expert who can help you make sense of your financial plans. Book your free 15-minute call today at charles-stanley.co.uk forward slash financialcoaching. Go on and get answers you can trust.

1:09And remember, investment involves risk. Now back to the show. From a£40 billion tax package last autumn billed as a one and done to winter fuel and IHT U-turns after pensioner and farmer backlashes and another tax-raising budget, albeit more stealthily. This was a year where fiscal discipline repeatedly collided with political reality and politics usually won. Simon, very briefly, if you were to assess teacher-esque the government's financial performance this year, what grade would you give them? And let's just stick to the old school. I don't understand this like 987 GCSE thing going

1:51Simon Lambert: on a b c d f as someone whose eldest daughter has just started her gcses and will therefore be numbered i also have no idea what the numbers mean i thought you're gonna say you're an expert in it my favorite thing about this is that actually it directly relates to to what you're talking about which is i do not understand why in this country we insist on making our lives harder than they need to be the GCSEs are now graded by numbers the way they explain those numbers is by referring to them as it's like an a or it's like a b they refer to them as like the old system so we've introduced a completely new system that hardly anybody understands especially those people who aren't actually at school at the time and then we explain it by reference to the old system the old system was totally fine i mean the old system was better before they started adding like random a stars above a and you could get a star star star star star star star star star star star star stars but yeah league one league two league three league four why do you have to go you know championship premier league just one two three works it works i've there's it's a great saying if it ain't broke don't fix it exactly there is another saying that we should adopt in this country which is if it is broke do fix it unfortunately to go back to your original question we appear to have adopted that if it ain't broke fix it and if it is broke just leave it and let it get slightly worse or patch it up and i will refer you back to one of my pet peeves the fact that our roads are completely falling apart you can listen to councils and the government blame that on you know the harsh british weather but i've been to hot countries i've been to really cold countries and the roads are much better literally no excuse literally and they are awful at the moment absolutely unbelievable but go back to the government's economic performance rather than the and we can't blame this government for all of that stuff we've been making these mistakes for years uh oh i mean do you know what i'm sorry i'm really sorry rachel reeves i'm really sorry keir starmer i think that you are trying so i'd give you a higher mark for for effort than i would for achievement but on achievement it's a d it's a boss though isn't it is it i thought it's a c and above is what counts isn't it oh right yeah yeah i'm sorry apologies to anybody listening who's at school and feels disheartened by that but you won't know what i'm talking about because you're numbered now anyway no it's a d and that's i think being generous i think the problem we have at the moment is the new government that came in last year yeah it's 2020 it feels longer doesn't it oh yeah no longer promised growth promised not to raise a number of taxes one of which arguably it has raised national insurance employers national insurance not employees national insurance but it is paid on people's wages it does affect employees and it's led to lots of job cuts as well and businesses saying that it's causing the problems and saying that the gut and saying it's an anti-growth measure there have been other things introduced that are anti-growth it hasn't delivered the growth that it promised it didn't come to power with any real plan to get that going in the short term uh it just thought that a change of government and being you know more competent than the last lot and saying that it was going to build lots of houses would be enough and it turns out that actually that's harder than you think uh and maybe they aren't more competent well they probably are more competent than the last lot but even then you're looking at it and going are they really uh so i don't think any of the growth stuff has come through i think some of the things they've done has been negative for growth and don't listen to me listen to businesses and i think the problem is is labor is not listening to businesses i want rachel reese to do well i want kirsten to do well because i want the country to do well and i'm fed up of being stuck in the rut that we're in but just look at what's going on with pubs at the moment pubs have turned around since the budget and said you've absolutely screwed us here you told us you were going to help us out you've actually caused us a massive problem um to the point where they're now barring you know all members of not all members they're barring label mps right from their pubs they've put up signs and things like that and they're just plowing on regardless going no no no no no no no actually we've delivered them a good deal and it's like you haven't you did not deliver them a good deal there's a reason why they're saying this you've got to pay attention and we've just had them finally pay attention to something that happened over a year ago with the farmers and inheritance tax where they've gone oh okay all right put up two and a half million then it's like the massive backlash from farmers oh well they're just grumbling oh no it's fine we've delivered them a very fair system we've delivered a very fair system it's like you haven't you what you what you're trying to do is crack down on really really rich people just buying land to dodge inheritance tax and you could have created a system to do that what you've actually done is created a system that massively disadvantages farmers and still gives those really rich people a bit of a benefit anyway so there isn't really an incentive for them to stop doing it and then farmers obviously got very upset about this and they just continued on going no no no you're nothing to complain about we've given you a fair system and so i think that you know there's a failure there and then i think so on the growth stuff they haven't delivered and they aren't really listening and then on the other end of the scale on the clamping down on spending uh which is something else that we need to do in order to balance the books that has obviously not really materialized either there's been a number of high profile u-turns and i think some of those high profile u-turns have come off the back of rushing things out when they didn't need to rush things out.

8:06Simon Lambert: Winter fuel, for example, the welfare reforms, which looked like they were desperately bashed together in order to try to hit the numbers in the spring statement. And unfortunately, it doesn't look great. And then the house building stuff, they're not going to hit the one and a half million homes target. But again, I think this illustrates an example of not listening, because the reason why we aren't going to hit one and a half million homes target is not because we need to rip up all the planning rules so that people can just build stuff wherever the hell they want the reason why we aren't going to rip meet the one and a half million homes target is because developers aren't building homes because they can't sell them people don't want to buy them we talked about this podcast last week and the week before it's like at the moment there's a new build crash going on where you can get massive discounts on new build homes because developers can't sell them there isn't the demand for them because people can't afford them because they're sold as premium products and people are already struggling to buy anyway because they're feeling the pinch and mortgage rates are higher than they used to be and so on and so on and yet we just keep bashing our head against this wall go build one and a half million homes build one and a half million homes there's a lot in there simon there's a lot in there but what sort of sticks out to me is let's stick with the sort of school theme and i remember a teacher once said to me a bit of advice for exams was go through it slowly rather than rush through and then return to it at the end because you're much more likely to get the right answer if you really focus on the question and then go with your initial instinct with it now i don't know about the initial instinct but certainly slow it down and it feels to me that since they've come in the government and i agree with you 100 we all want them to do well absolutely we wait you know they came in on the crest of positivity and this is where we go into your theory on miserablism.

10:03We did immediately get we're all in a big, dark black hole. We must tax, but don't worry, it's a one and done. And that's continued. And I just don't understand. Why did we have to go at such breakneck speed when you will, of course, get U-turns on things like winter fuel, inheritance tax, benefit bill, which can't seem to get through, makes you wonder sort of almost as well, who's in charge with some of this? If they can't just get a policy, get it through, they've had 14 years to think about this. And I think some of the measures as well, things like the mansion tax, which we said is not even a rounding error, how much money that they will take in from it.

10:46It seeps down to people, even people who will never pay it. A bit like inheritance tax. It's one of those things that people go, it's not fair. It's anti-ambition. Even though, like I said, they will never pay that tax. And I think this is seeping into the country and creating a really, really bad vibe. And I'm not sure, and this is a podcast about 2025, I'm not sure what you do for 2026 when you think we've had a £40 billion tax package last year,£26 billion this year, and then the OBR says it's going to do nothing for growth. What on earth are we doing it for is the question that people are asking.

11:25Yeah, don't ask me. Ask people in the street. Ask businesses. I don't know what you do in that regard.

11:32Simon Lambert: I agree with you. And I think that one of the mistakes that was made again, the miserablism stuff, was we did the miserablism thing again twice. We did it last year and it didn't work last June and then we did it Rachel Reeves did it this year again with the the build up to the budget and that mad speech that she did um only to then do a u-turn on raising it income tax and actually arguably Rachel Reeves look I don't want to pay more tax uh I pay lots of it already okay but arguably Rachel Reeves should have raised income tax that is by economists were widely agreed that it was probably the best thing to do if you've got to do it just do that not lots of little bits of snipping around the edges which creates the opportunity to cause problems it skews things you tinker here you tinker there it pushes a bit out over there pushes about over there just you know the broadest tax pretty much everybody pays and you have to listen to what's being said about the fact that unfortunately the basic rate needs to go up you can't just put it up on high rate payers because they're already paying a huge amount the basic rate needs to go up and you explain to people look you've actually already had a tax cut the tories took 4p of national insurance at the lower level that's the equivalent of that national insurance is an income tax it's not income tax but it is an income tax so people had a 4p cut in the tax that they pay on their income and you just say to people we couldn't afford to do that couldn't afford to do the first one we definitely couldn't afford to do the second one we're going to have to take some of it back but you're still in a better position in terms of the taxes on your income than you were two and a half years ago well and because we're doing this we're not going to do all these other things because we've realized that that is a mistake and it was a mistake by us and it was a mistake by our predecessors and you just move on and you but you listen to people and to go to the inheritance tax point i've said this for years inheritance tax somehow manages to be like the most hated tax in uk despite the fact that hardly anybody pays it lots more people are going to pay it in future due to the pension uh raid it's going to go up to one in ten from one in five and i suspect it will actually go up quite a lot higher than one in ten and unfortunately those people who do pay it can end up paying hundreds of thousands of pounds and we're not talking about rich people here we're talking about people in the kind of you know they're affluent by all measures but we're not talking about the super rich people but everybody hates it and it's like if there's a scenario where you've got a tax that hardly anybody pays but is the most unpopular not everybody hates it but lots of people hate it it's the most unpopular regularly found to be the most unpopular maybe you should just get rid of it or do something about it in a way that means that all of a sudden it just it's unpopularity just like decreases it you you kind of you know you revive his image basically you give it a rebrand um you know you make it completely different or much less you know hit people less harder or whatever you do right because it's damaging your tax system it's damaging you and so you listen to people and if people are complaining about all these other little things then you just go oh do you know what you listen to them if pubs landlords saying okay we're just gonna like we're already at the point where we're gonna have to shut we're gonna have to shut this is absolutely terrible for us you listen to them if farmers are saying you know we're not making any money at all you've totally failed and the government for failed to deliver on what you said you'd deliver when we left the eu and replacing the payments um we've had the worst harvest in you know however many years just watch clarkson's farm for example you know like and we can't do this we're not doing this to make money yes we look like we're worth lots of money on paper but you know it's a business that gets passed down to generations you don't want to be the person who gives up the family farm etc etc etc so just listen to them um and there's a difference between listening to people and the you know general population and listening to the most vocal people those with an axe to grind or those with the vested interest or the sort of playing to the crowd element.

15:52Simon Lambert: And I think the problem is, is at the moment, there's a lot of the latter and not a lot of the former. There's too much listening to the most vocal kind of playing to the crowd elements and not enough listening to people in general. And it creates a toxic environment, which also opens the doors to stuff becoming way more toxic. Yeah, I mean, going back to the inheritance tax thing, it returns to something you said right at the start. If something's broken, fix it. And if it's, as the IFS said in a report just before the budget, at least don't make it a lot worse by making it more complicated. And this is the problem, is the system, the tax system is far too complicated.

16:38There are decisions being made that law of unintended consequences, people talking about rich people leaving so you may not get the money that you hoped for anyway it is just a mess

16:49Simon Lambert: I would agree and I would say that my major disappointment is that I always thought that when uh Labour came to power and Rachel Reeves became Chancellor there was like the opportunity to do blank slate to go right it's not working we're going to change things and you don't have to say and also this is the other thing I think we should do so to go with a kind of don't bring me problems bring me solutions i think we need to identify where we want to get to and we then need to sell that vision to the public and say look okay yeah people aren't happy but we live in a great country we live in a country where we have freedoms where we have protection of our freedoms where we have protection of our property rights where we are a democracy you know we've got this government because you voted it in we have an orderly transition of governments you know all those other things we we live in an amazing country a country that is so good that you know people from all around the world are traveling to try and live here and it's not just it's not because we're a soft touch okay it isn't because we're a soft touch some of it is because of the english language um but it is because people want to live in britain they see it as like they're like okay of the list of countries that i want to live in britain is absolutely near the top or at the top so that in itself says a good thing but we're not in a great place but this is where we want to get to we know you're not happy on this we know you're not happy on that but like with the tax and economy thing we say okay this is the path this is how we're going to get there but it takes time so for example with the tax system you go it's a mess blank slate we're going to change things but we're not just going to do it overnight as in here's the budget tomorrow that happens or here's the budget it happens in april we're going to get there gradually so for example if you go look at you know one of the pet complaints of this podcast the 60 tax trap right which basically means like highly productive people trying to do less work cottage industry and trying to earn less money okay they earn lots of money they're more than 100 000 pounds but they're being taxed 60 on the chunk between 100 000 pounds and 125 000 pounds where the person gets taken away lots of people agree this is a bad thing and it's economically negative you say okay we can't get rid of that overnight i mean you could get rid of it overnight and it'd probably be positive but you go okay we're going to work towards getting rid of it you do the same with the child benefit thing i the student loan stuff as well i mean the level of tax that um some grads are paying uh if you basically look at their student loan repayments as effectively a tax on their income that the sort of you know the marginal rate that they're paying compared to somebody who didn't go to university is sky high okay we're going to gradually do something about that and that then gets rid of some of the fears of the kind of list trust quasi-quarting mini budget moment where all of a sudden you make all these dramatic changes and uh international bond investors institutional bond investors freak out a bit say well we're gonna you're gonna have to pay us more money to lend to you uh it also you know there were concerns about this with the budget we've had a number of wobbles this year as well you take away some of that because you go look this is where we're we're trying to get to and the other thing i think we need to do in terms of that is we're way we you know we're way too reliant on this whole um government borrowing thing because our government borrowing is so big and so we've we're doing policy by spreadsheet trying to hit the numbers tick the boxes and we've backed ourselves into a corner with that because we've got to keep doing it because if we suddenly say we're not going to do it then all of a sudden investors and we go oh no we're going to demand a higher yield for that to hold those guilts the other but we've got lots of people in this country with quite a lot of money who want a return on their money let's tap them up let's tap them up let's say instead of like you know issuing debt uh to in to big investors to gilts you know to buy into um which you know you can buy as a retail investor as well and actually they're very popular amongst retail investors look at that and go hang on a minute there's all these normal investors going out and buying long-dated gilts why don't we just issue some that are only for you know people in the country pays them a guaranteed income ideal for people in retirement guaranteed income back by the state and then you put an inheritance tax break on it and it says you know you invest a thousand pounds in these bonds and you hold them for longer than a certain amount of time they become inheritance tax free so you know it solves two problems in one go and you tap instead of trying to trying to like take the wealth off people through taxes you tap into that wealth and say look lend it to us we'll make the country better indeed simon indeed i want to talk in more detail about the sort of environment, the economic environment that we are living in at the moment, which includes housing market, interest rates have continued to fall, inflation has remained off target.

21:51Overall, what is the picture? I mean, you sort of say it's gloom and doom, but overall, let's look at interest rates. Why have they been falling if inflation hasn't really moved a huge amount explain um because the bank of england's uh rate setting policy the monetary policy committee

22:10Simon Lambert: is looking at what it thinks will happen to inflation in the future so the inflation number that we look at is backwards looking that's how prices have changed since a year ago what the bank of england's monetary policy committee is considering is what it thinks gonna is gonna to happen to that inflation number how prices are going to change a year ahead two years ahead three years ahead the further out that you get the harder it becomes to predict this kind of thing and the wider the potential path becomes the closer you are in time the closer they think they can be in terms of of accuracy so they're looking at inflation coming down that they they always said it was going to peak this year around about septemberish time and there was a number of factors involved there there was some stuff to do with energy prices there was food prices there was other things like that but then they thought it was going to start coming down and that doesn't mean that life is getting cheaper unfortunately it just means that it's getting more expensive slower this has enabled the bank of england to cut interest rates and we've seen a whole one percentage point or one percent to normal people taken off the bank of england base rate and we're now down to 3.75 as lowest it's been in uh since 2023 when it was on its way up and this is good news for mortgage borrowers it's good news for businesses it brings down borrowing costs it should stimulate the economy because by making the cost of borrowing money cheaper you theoretically increase demand to do so and that enables more businesses more consumers more mortgage borrowers to borrow money and then go out do something with that money but the bank of england's not looking at economic growth it's the npc's mandate is inflation target two percent inflation has been stickier than we thought i think something that is in rate setters minds means is the fact they got caught out by the cost of living spike.

24:16Simon Lambert: I think it's in rate setters minds around the world. They got caught out by the cost of living spike and they don't want to get caught out again. So I think there is a degree of caution from the Bank of England, from the Federal Reserve, less so from the ECB, but there is still a degree of caution. And so they don't want to go all guns blazing, aggressively cutting. There are expectations that will be cut maybe one time more or two times more next year. And then that's probably going to be barring some kind of you know major financial incident that's going to potentially be it there are some people suggesting we might get a recession next year that could encourage the bank of england to cut rates by more but the bank of england won't necessarily cut rates by more if inflation is still proving to be sticky even if we do go into a recession but in theory the rate cutting bit of a cycle is good news for the economy and tends to stimulate the economy and the us is in the rate cutting bit of the cycle as well so that should be good for the global economy inflation is coming down you know three percent isn't too bad growth has been a bit near better in the first half of the year not so good in the second half of the year but next year could be better you know as i said some people are suggesting there could be a recession maybe not i think if you listen to businesses then it doesn't look great but actually the consumer looks reasonably good mortgage cuts stimulating the housing market a bit which has been in the doldrums this year quite often after a year in which the property market's been in the doldrums it suddenly picks up the next year it can surprise you as we found out during covid and i think there's every chance that you know next year could actually be way better than people think and we might not be in such a bad position and also maybe just maybe we might have put all of this kind of tax rise stuff finally to bed and actually tax receipts are pretty good so if tax receipts hold up pretty well government borrowing costs come down um we ditch a bit of the doom and gloom then next year could potentially be really positive do you know it makes me think of a a quote is it hamlet i don't know there is nothing good nor bad but thinking makes it so and we're going to be talking about investing in a minute, but so much of this is down to sentiment.

26:27If we believe things are rubbish, then it feeds on itself. So yes, Simon, hurrah for a bit of positivity. This was the year, talking of mortgage rates, where a lot of people came off those ultra low, alas, not me, because I never had one, ultra low rates. Did we see a little bit of a wobble with people having to pay a lot more money or have we weathered that particular financial storm as well?

26:56Simon Lambert: We've weathered that particular financial storm much better than most people thought we were going to weather that particular financial storm. If you think about it, people are suddenly facing, in many cases, hundreds of pounds more on their mortgage every month. And that is a large amount of extra money to be paying, especially at a time when lots of other costs have continued to be going up as well. And actually, people appear to have just swallowed it. it's seriously detrimental to people's financial position in terms of a you know it's going to be making a difference to how they live they might be having to cut back on as many luxuries as possible um with you know all that chat about the insane cost of going to a wagamama or a pizza express site there's going to be a lot of middle-class families who are not going to wagamama or pizza express very often it's going to be having a really detrimental impact on people's ability to save money and to invest money because the money that they would have otherwise been potentially saving each month is going on you know covering the extra cost of the mortgage and that's that's created a buffer that's meant they haven't ended up in financial difficulty due to their mortgage costs going up but the flip side of that is it now means they can't save any money hopefully most of those people are still automating their money into their pension every month for employment and so on it's definitely a big problem for people who are self-employed and don't have the reliable monthly income coming in i i had one of those very ultra low mortgage rates i had a 1.4 percent five-year fix and we came off it in september and went on to a rate of just below four percent which is good like you know we got below the four percent mark um our mortgage is 500 pounds a month more expensive that is it's a big dent that makes a really big difference as to what you can do each month and I'm not complaining I'm not on the breadline I'm still have a very very nice life but it's a big big difference between what we can do as a family like the money that I could potentially save every month and so on and overall that does have an impact and we'll be acting as a major break on the economy there's still UK finance reckons 1.9 million people who need to remortgage next year the question is how many of them are going to be seeing rates jump and how many of them are going to be seeing rates go down because if they took out a mortgage five years ago they took it out in 2021 when rates were still super low if they took out a mortgage two years ago they took it out in 2023 when rates were considerably higher so you might get a sort of balancing effect whereby actually the losers are getting hit but the winners are getting a bit more money you know so for the economy there'll be a bit of a seesaw going on um so it's not necessarily as bad as it is but we aren't out of the woods completely on this one yet no indeed right i did promise investing that thing the government is desperate to get us to do more of.

30:05It's been a strong year for the FTSE, hasn't it? Volatile one for AI leaked stocks and a standout run for gold as uncertainty lingered though. But Simon, use one word to sum up the year in investing.

30:20Simon Lambert: Great. The FTSE is up, as we record this, 19.5 % this year footsie 100 that's a really great year the s &p 500 which is you know the major u.s stock market the u.s stock market makes up 60 70 percent of the world stock market so you know it's the barometer for that it's up 18 this year that's a fantastic return but it's been a roller coaster ride along the way if you'd have said to people after donald trump announced his tariffs uh in early April and markets were absolutely crashing and he still wasn't backing down. This would turn out to be that kind of year for investors. They'd have called you a lunatic, but it's turned out that markets rebounded really hard after that.

31:08Simon Lambert: Trump eventually did back down. We had one of the shortest major corrections seen ever. And actually, interestingly, corrections have become a lot even the covid crash was quite quick markets got back to the level you know surprisingly fast after covid considering what happened and so it's been led by you know big u.s tech stocks the ai giants there's worries over an ai bubble there is certainly some big red flags going on some of the circular deals and stuff like that some of the companies that saw their value rocket and then in some cases sync again oracle i think is the is the one to watch here but then some of those other companies are making money hand over fist nvidia for example is hugely profitable but it announced blockbuster results and then has actually seen its shares fall since which illustrates the danger when companies are priced for perfection is you can deliver almost perfect results and still potentially suffer after the event but you can't say it's only the ai bubble because look at the boring old footsie with its lack of ai driven tech giants you know it's done fantastically well it's up nearly 20 in the year so these are the it's years like this that deliver a lot when it comes to the long-term returns of investing because it's years like this when you want to be invested all through the year from the start to the finish that you didn't bail out um after the tariff wobble and then not get back in and then you lost out you know because you then bought back in higher right at the peak in the summer when all of a sudden things were going really well again and you know these are the years where over the long term those figures that show investing in stock market beats cash come because cash returns are still pretty good you get four percent on a savings account at the moment which is pretty impressive seeing as the base rate is 3.75 percent you get even more than that on a cash iso but the difference between that and your 20 percent return from the stock market is substantial now what could happen is next year the market could fall 30 percent and those are the years that dent your returns but what but by being invested in the year where it went up 20 if it does then fall 30 you know it's not so bad um because you have to take the rough with the smooth and you end up getting more good years than you get bad years but yeah it's been a it's been a great year for investors if they've managed to stay the course well i was gonna say this is great for those who you know this is a year in a long previous time before and after.

33:53If you are entering, if you're new to investing, which the government is very keen, I was reading an article about what an interesting time for the government to want to get people investing, where markets seem very high at the moment. But then we're seeing things like commodities like gold and silver also high because of the unpredictability of what's going on at the moment. An interesting time. Is it like one of those cases where you had to get a mortgage just as Liz Truss's mini budget blew up or you unfortunately bought a house just before the financial crisis? Is the now one of those times where if you start investing, you're going in at a peak or is it just like, well, you've got probably got, if you're investing, you've got years to go anyway, so it doesn't really matter.

34:33Just do it.

34:35Simon Lambert: Potentially it is one of those times. And I would recognize that if you are someone who is new to investing and has a large amount of money that you're considering investing so the way to get around this is to drip feed money in to if you've got a large sum you invest it over a period of time and then you know you could get really unlucky and you just invest it as the market stays absolutely at the same level and then right after you've drip fed it all in the market crashes and i'm sorry there's literally nothing i can suggest to protect you from that but you know you could be investing as the market goes up and therefore you're already making gains on the money that you've put in but you're not putting your whole lump sum in and risking that sudden drop um or you could end up with the market going down but then because you're investing gradually yes you're losing money on the money that you put in first but you're buying in cheaper and cheaper and cheaper and eventually the market will get to the bottom and it will go back up um i would say if you are new to investing regular investing is the thing to do put in a bit of a lump sum if you want to but then do some regular investing and then just think very long term it's not a one-year game it's not a two-year game it's not even a five-year game it's a 10-year game or longer and so don't invest money that you cannot afford to have in full in the short term if you need it it comes down to education though doesn't it simon i mean i mentioned earlier about the government desperate to get us investing What solution did they have?

36:08This was the cutting, of course, of the cash ISA limit. The danger is, I suppose, a lot of people don't invest. I mean, there's lots of reasons, maybe at a certain age where it's not sensible to, but lots of people don't invest because they think it's too risky. You then enter a market. It falls, as you said. I mean, it's not going to, we don't know it's going to fall 30%, but let's say it does. And then you think, that's exactly the reason that I didn't do it in the first place. And then you don't do it again. So eyes wide open, I think, when you go in this and education. I think needs to come as a suite from whoever, the government or businesses, whatever, to get

36:41Simon Lambert: people investing, but with knowledge. And I would agree. And there is a lot, you get a lot of comments like that. Well, you know, I'm only going to lose money. People do things they lose money on all the time, though. People are happy to go and buy cars. You're guaranteed to lose 30 % on most cars that you buy in a couple of years. That is the equivalent of some of the largest stock market crashes that we will see and if you buy that car and you lose 30 on it in two years i promise you you will have to wait much much longer for it to ever regain its original value than you will if you invest in the stock market and it falls 30 in the first two years you have to wait a really long time and spend a lot of money on maintenance for that car to ever become a classic that regains its original value um so maybe think about that i do think sorry to put a little bit of negativity into the conversation again but on the point of not listening this is a classic example the government has had spent quite a lot of time coming up with its we want to get in people investing plans and the we want to get people investing plans predate this government this government in theory engaged the investment and savings industry on this question and consulted them as to what they should do.

38:00Simon Lambert: Overwhelmingly, the investment and savings industry said cutting cash ISA is not the answer. Even if it does make a few people invest more money, they won't invest it in the UK stock market. They'll probably just buy into big US companies. I don't think the British ISA was a particularly great idea, but it was a better answer than this. And the government completely ignored what people who actually know what they're talking about in terms of personal investment and savings said to them and some of the people saying don't do this literally would have benefited in theory from this you have people running investment platforms that don't even offer cash isis saying don't cut the cash isa it's not going to make people invest you have people running investment platforms that do offer cash isis saying actually do you know what we do get people in with cash isis and then we try to convert them to become investors because want them to like you know use the other part of our business and use the cash isa as like the gateway drug kind of thing get them in it's the bit people understand then sell them the investing there so don't cut the cash isa i had it described to me by one very very senior person in the investment platform industry the other week um as it wasn't a consultation they just kept telling us what they wanted to do and then saying can you do it so they didn't listen at all and they've just created a lot of bad headlines off the back of cutting the cash isa and it's not going to get people investing at all maybe some of the other stuff that they're about to do in the new year will but the cash isa cup completely pointless it's taken us back to a position that we got read of where there used to be different cash and investing ISA allowances.

39:46Simon Lambert: We got read of that because it didn't work and it was a bad idea and we've just gone backwards and we completely ignored all of the people who know what they're talking about who said don't do this. I sense that's an unfortunate theme at the moment but there's always next year to reverse our course. Anyway Simon you almost beautifully teed me up and then you went talking about the going off course she went off course. You mentioned cars. It was a beautiful segue to my next story. And then you didn't talk about cars anymore. So I'm going to bring cars back because this is a personal finance and consumer podcast.

40:21I want to talk about one, the big, I suppose, consumer story of the year. It wasn't quite PPI, was it? But still a billion pound headache for lenders. The car finance scandal compensation palaver. It still rumbles on. There was a story and this is money about it a couple of weeks ago where are we at pricey i mean i'd never got anything from pbi i certainly wouldn't have got anything from the car finance because i just buy

40:45Simon Lambert: things out right where are we now well we are on our way to getting it sorted i would argue the car finance thing comes from this huge boom in people buying cars through finance agreements usually pcp deals where effectively what you're doing is you're paying off the depreciation of a car over three years four years five years and then you have the opportunity to buy it at the end and unsurprisingly some of the people working for car dealers were loading the system to their own end they weren't giving people buying cars a fair deal who would have thought it car dealers not entirely trustworthy when it comes to financial stuff and trying to just make money wherever they could anyway this was a huge industry backed by some very very large lenders it all blew up people felt they'd been missold there was talk about you know a ppi on wheels type thing where everybody was going to start reclaiming the fca stepped in the fca outlined what it was going to do about it who was going to be able to claim it is in the process of um bringing in a system for people to claim uh if you do think you're a missile car finance don't sign up to uh someone promising to get it back for you um to one of these no win no fee firms do it through the fca um then you will get the money yourself the fca you know estimates people are going to start getting these payouts over the next couple of years the motor industry is still unhappy about it the banking industry is still unhappy about it there's still some debate as to whether the fca scheme is going to come in in the form that the fca has outlined it and we will know that probably in the next few months all right then finally your stat of the year 39 first-time buyers made up 39 of property sales this year according to zoopla which is up from 35 the year before and also is above the 25 year average so that is actually a good figure that shows that we are getting more people onto the housing ladder it does also reflect the fact that the rest of the housing market has been somewhat moribund and there's less people moving home um but you know the fact that more first-time buyers are managing to buy is a good thing because at the moment in theory house prices are going up by less than inflation and people's wages are going up by more than house prices and so despite mortgage rates being high homes are theoretically getting cheaper and that is reflected in first-time buyers and that is a sign of health in the economy there we go a nice positive note to end on that's it for 2025 if you can keep up with all the latest breaking money news in 2026 and beyond just go to thisismoney.co.uk or download the app and if you have any comments or questions for the team or anything you'd like to look into simon you can email us at podcast at this is money.co.uk i hope that you all had a wonderful christmas i hope that you have a very happy new year all credit to georgie who when we were debating whether we should do a podcast this week or whether we should take a christmas week off was like no we need to do a podcast we're doing a podcast so there you go we've done you a special christmas week podcast you've had to listen to the two of us ramble on normal service will be resumed next week but if you have any questions for us what do you want to know about money what's your question what do you want us to look into what do you what do you want us to talk about what do you want to tell us about the podcast what do you want us to do differently what do you want us to do more of email us at podcast at this is money.co.uk and finally we really really really appreciate you listening we love all the messages that we get from you saying that you enjoy listening to the podcast.

44:47Simon Lambert: We loved it in the podcast. And thank you for listening in 2025. I mean, here, here, there's not much to add to that, Simon, but to say thank you very much. Have a very happy new year. And Simon, I think it was a bit of exuberance from both of us yesterday in our inability, I think, to judge our time management very well, that we thought that this was a very good idea. But I'm glad we did. It was good to speak to you today, Simon. Good to speak to you every week. thank you very much and thank you for listening and if you do like our podcast why not rate us wherever you found us it helps other people find us too