What's in store for us in 2010

Ronald Reagan said: 'I don't worry about the deficit. It's big enough to take care of itself.' With that in mind, let's leave our government to its debt problems and consider what else is in store for us financially next year.

Predictions for UK economic growth in 2010

Considering the OECD recently had to double its growth forecast for 2010, it's clear forecasts are unreliable.

The IMF predicted in January growth for the world in 2009, but it dramatically corrected this in April 2009 to a major slump. At least this latter prediction was more accurate, but it's another example of unreliability.

The IMF has upped its UK growth prediction for 2010 by 20% in the past few months, although a few months before that it read bird entrails that said the UK would shrink!

Look to your jobs

It's not easy to project the economy even over a few months. However, we know the economy has shrunk a lot, meaning we're producing a lot less goods and services. Even with the most optimistic forecast of 2.1% growth from the Bank of England, it could be some time before we're producing as much as before. This means we can expect higher unemployment and even rising joblessness through 2010.

Securing what we've got will be the name of the game next year. After Christmas we must sober up, start saving and paying off debts, and work hard to make ourselves invaluable to our employers.

UK house price predictions for 2010

These are forecasts for the average change across the whole of the UK, but there will be huge regional differences.

As you can see, the experts are split on whether prices will rise or fall next year. In lovemoney.com's November poll of readers we also had split results:

• 33% said house prices will rise next year.
• 28% predicted they'll stay the same.
• 39% said they'll fall.

Many of these predictions were based on broad ideas such as 'property is still overpriced' or 'there's not enough supply to meet demand'. I would caution you against making short-term forecasts on such a broad basis, because prices frequently move irrationally for long periods, even years, which is why property's notoriously difficult to call.

Look to your mortgages

As time goes by it's likely that banks will foresee rising inflation. Indeed, lenders have been slowly increasing the cost of mortgages this year. Their inflation forecasts are probably a contributing factor.

Keep at least two eyes (more, if you have them) open for reports of increasing mortgage prices. Before you see too much momentum it may be time to lock in a cheaper, long-term deal. If inflation grows as the Bank of England expects, you may find you've left it too late by the end of 2010.

Compare mortgages at lovemoney.com

UK stock market predictions for 2010

*Based on the mid-afternoon FTSE 100 starting price of 5,201 at end November, the month when these forecasts were made.

These forecasts were all in this article.

These forecasts are based on the FTSE 100, a benchmark of the biggest listed companies in the UK. It's a pretty good indicator of the entire market's performance.

Looking at the table, you can see that the professionals are widely split on 2010, with a spread of forecasts from a fall of 10% to a gain of 12%. Remember, all these folks were making predictions in 2007 and I don't recall any of them saying the market was going to crash!

Look to your retirement plans

Most of our retirement plans are built on shares. Many of you will not want to experience the sort of recent losses again, so you'll be beguiled by 'structured products', which promise you safety if the market falls.

These products take many forms, but generally you can expect to see such attention-grabbing lines as: 'All your money back if the stock market falls, but if it rises you get 120% of the gains!'

Firstly, you should know that these products are what caused a few banks their major problems recently. Secondly, the promise of safety and rewards are nothing like as impressive as the banks make them sound. (Don't buy any product if you can't work out how it makes the bank money!) Straightforward investing in individual shares or in index trackers over long periods are a much better bet.

Some of you may want to turn your back on shares altogether, but you need to think longer term. After a poor ten-year period like we've just had, we tend to have a great ten years. Also, if you look at almost any twenty-year period, the stock market has walloped those who left their money in savings accounts. It makes sense for most people to invest in stocks for their retirement. Owning a home is clearly a good idea too, but if that's all of you've got then it's a lonely, large, centrally-heated egg in one basket, and you can't easily get an income from your own home when you retire! 

Get help from lovemoney.com

If you need a bit of help with your finances in 2010, we can help.

First, adopt a goal, from Pay off your mortgage early to Build up your savings

Next, watch this video: Property vs Pension

And finally, why not have a wander over to Q&A and ask other lovemoney.com members for hints and tips about what worked best for them?

Use lovemoney.com's award-winning mortgage service to compare the whole mortgage market 

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