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The sovereign state we’re in

This year saw the 2008 financial crisis spill out into a European sovereign debt crisis.

Jittery bond markets increasingly felt that European Union states had been left with unmanageable debt.

First, Greece was bailed out with £92bn in May. A £629bn package of support for eurozone economies was agreed but Ireland still needed a £72bn bailout in November.

Greece, Ireland, the UK, Spain, Germany, France, Portugal, Italy and Romania were all forced to adopt severe austerity packages of spending cuts and tax hikes.

UK investors saw an end to the stunning market rallies of 2009 and a new phase of highly volatile, range-bound market trading. The FTSE 100 opened the year at 5,522 and peaked at 5,825 in April before dropping to 4,805 by July. The index had recovered to 5,806 as of last week.

UK interest rates stayed at record low. In the US, the Federal Reserve added a further £372bn of quantitative easing in early November.

The year also held fears that China would tighten its economy to cool its property market, possibly by raising interest rates.

The price of gold consistently broke through new highs as speculators sought a safe haven, hitting $1,432 an ounce last week.

Child trust funds were soon scrapped after the May UK general election led to a Conservative and Liberal Democrat coalition although the June Budget brought plans for junior Isas.

Bond funds were popular with investors, with net inflows of £4.6bn by the end of the third quarter and equity funds receiving £7.5bn.

But Gartmore saw its share price fall from £2.20 when it debuted on the London Stock Exchange in December 2009 to £1 as of last week. The problems began when star manager Guillaume Rambourg was suspended in March and got worse when a row erupted as another star, Roger Guy, criticised Gartmore’s best-execution rules.

Rambourg quit in July and Guy left in November. In December, Gartmore axed 35 staff and has effectively put itself up for sale. Gartmore’s woes show no sign of ending as the year draws to a close, with US regulator the SEC fining it £856,000 for breaching short-selling rules.

Jupiter Asset Management floated in June in a popular IPO that saw it raise £220m to pay off debts and hand out millions to senior staff. Its share price went from £1.65 at launch to £3.08 last week.

Jupiter star financials fund manager Philip Gibbs handed over the fund to his former protŽgŽ Guy de Blonay to focus on a new absolute return and international financials fund.

A complex and long-running situation saw income stopped in February for around 19,000 investors in Keydata products, with £349m held by Luxemburg-based Lifemark.

There were fears that investors could lose their cash before Lifemark got a bailout from US hedge fund CarVal and Norwich & Peterborough Building Society after months of negotiations. In September, the FSCS said it would compensate investors. Advisers are now facing a levy of up to £100m to cover the Lifemark bill.

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