Steady

Budget Summary

I despair at the state of the UK and UK politics generally. Probably global politics. Was that even a UK budget? I’ve already forgotten most of it. I don’t need to remember much because I know most of what was said was just hot air.

  • A new British ISA – I know this isn’t going to happen, within 1 week it’s already been placed on the back burner until 2025.
  • An attack on holiday property entrepreneurs from 2025 – I’ve no idea who else will be buying these former run down properties. I expect seaside towns and other beauty spots to decline without this inward investment. Formerly poor areas will now lose a large part of their much needed tourist economy. Sure local property prices will become more affordable as “out of towners” retreat, but without those tourist jobs the locals will not have the income to be able to buy a local property.
  • Non-Doms told to leave in 2025 – like the Conservative Party even has a say in this. they will be toast probably by November this year. It was always Labour policy to do this. I’ve looked at this area in some detail. Non-Doms do pay tax, pay VAT on their outsized purchases and stump up oodles of stamp duty land tax on multi-million pound property purchases. Non-Doms also employ a small army of accountants, solicitors, financial advisors and investment managers (not me), cleaners, gardeners, hairdressers, manicurists, dog walkers and property maintainers. All of which will lose customers – meaning lower VAT receipts and lower income tax on profits. They are not tax dodgers, just because the investment income they earn and leave abroad isn’t also taxed in the UK. Where does any political party expect to replace all of this lost revenue?
  • Plus some other drivel set to come into force in 2025 & 2026. Who believes any of that will happen with a change in Government?
  • The NHS is broken, let’s throw another £3.6bn at it in the future (a future which we are all sure doesn’t include a Conservative Party). More empty promises.
  • Oh yes – there was the bribe of a reduction of 2% in NI for those working below the age of 66. The trouble is, 1 in 5 eligible “workers” do not work in the UK or register for benefits of any kind. They don’t pay tax or NI. Obviously it is the 4 in 5 that do work that pay all of the taxes. Will £10 a week per worker change any voters mind? I doubt it.
Continue reading “Steady”

As February Ends

Rebalance

As promised, albeit a little later than hoped, here’s a little commentary behind the recent rebalances of our main portfolios held on the Transact platform.

Inflation

As investors, our world changed at the beginning of 2022 as the rate of inflation ran rampant and central banks endeavoured to control inflation with aggressive interest rate rises. Equity markets plummeted. It seems like the easy yards have now been gained with inflation in the UK back from 11% to 4% now. Getting the rate of inflation down from here and back to the 2% per annum target will be a stickier proposition. More importantly other nations, including the US now have inflation in the low 3’s, so the UK should fall back in line within the next month or two.

As interest rates rose a safe cash return seemed like a much less risky proposition than shares. However change is finally afoot.

Opportunities & Risks

The eyes of investors are focused on five main opportunities and risks

Continue reading “As February Ends”

2024 Begins

Happy New Year!

Before we look ahead to this new year, let’s look back at what we all went through in 2023. It was really quite a lot!

January

  • China opens borders, ending zero-COVID policy.
  • Almost three million people were infected with COVID-19 over the Christmas period
  • Microsoft invests $10B into OpenAI, extending their partnership.
  • UK Inflation starts the year at 10.5%

February

  • Chinese “Spy Balloon” drifts over the Americas.
  • The original 4 day Russian invasion of Ukraine has now lasted 365 days.
  • Russia suspends participation in nuclear arma reduction treaty.
  • The Bank of England raise interest rates from 3.5% to 4%.
  • US interest rates rise to 4.75%
  • A milder winter across Europe ensures gas reserves do not run out as feared.
  • An estimated 475,000 workers go on strike, the single biggest day of industrial action for more than a decade, 

March

  • Silicon Valley Bank and other regional US banks collapse causing banking turmoil.
  • The Bank of England announces that the UK arm of Silicon Valley Bank is to enter insolvency, following the demise of its US parent, the largest banking collapse since the 2007/8 financial crisis. Many UK tech startups are prevented from accessing cash to pay staff
  • UBS buys collapsing Credit Suisse for $3.2B
  • BOE base rate rises to 4.25%
  • US interest rates reach 5%
Continue reading “2024 Begins”