AS we head into 2017, Brewin Dolphin's Neil McLoram takes a look at how the year has started.

Market

London equities started the new year with a bang, with the FTSE 100 hitting a fresh record on Tuesday and then again on Thursday of last week, touching 7,206.

The benchmark index has now risen by almost 25 per cent since the EU referendum vote in June.

The shortened trading week started strongly with banks including Lloyds Banking Group, Royal Bank of Scotland and Barclays all finishing in the black after it emerged the Basel Committee on Banking Supervision postponed new rules on capital requirements.

Crucially this means president-elect Trump, who is known for his anti-regulation stance, will now be involved in approving the new rules.

Next

Next couldn’t offer any new year cheer to its shareholders when it issued a trading update cutting its profit forecast for the current year after reporting a disappointing Christmas trading performance.

The clothing chain reported its full price sales between November 1 and December 24 were down 0.4 per cent on the same period last year.

The company warned of a “challenging” year ahead as inflation begins to erode real incomes and household budgets come under pressure.

Next also cautioned that the devaluation of the pound could push up prices by five per cent. This is expected to depress sales revenue by about 0.5 per cent.

Manufacturing

It was quiet on the economic front over Christmas and new year, but there was some seasonal cheer with news activity in the UK’s manufacturing sector grew in December, hitting its best level in over two years.

The boost was largely the result of the weaker exchange rate, which helped increase exports.

The Markit/CIPS services purchasing managers' index rose to 56.2 from 55.2 in November, beating expectations for a drop to 54.7.

The index was above the 50 mark that separates contraction from expansion for the fifth consecutive month, signalling a continued recovery in growth following a contraction in July in the aftermath of the Brexit vote.

Tim Moore, a senior economist at IHS Markit, said the survey data confirmed a solid rebound in UK construction output during the final quarter of 2016, with housebuilding providing the bulk of the growth.

The commercial construction sector was the weakest in the data set, with performance blamed on subdued investment and economic uncertainty.

Mortgages

In other news, mortgage lending increased by less than expected in November but consumer credit – borrowing such as personal loans and credit cards - reached an 11-year high, Bank of England data revealed.

The total amount outstanding on credit card debts had already hit a record high last October as consumers used plastic to fund shopping, but the latest data showed borrowing rose by £1.9bn in November, the largest amount since 2005 and pushing the annual growth rate to 10.8 per cent.

The boom has been encouraged by credit card companies offering shoppers zero per cent interest rates for periods of several years in a fiercely competitive market.

British households now have £67bn of credit card debt outstanding.

Guy Foster, head of research at Brewin Dolphin, said: “While official interest rates have only moved once in the last six years, effective interest rates have been steadily falling making borrowing easier and more affordable for many.

"While the economy has done relatively well, UK consumers’ predilection for debt will limit the long-term growth potential.”