WE talked last week about investor’s behavioural psychology and it is no different with businesses.
With the Bank of England’s commitment to maintaining interest rates with a hold decision being made in July. Martin Weale a committee member of the Monetary Policy Committee confirmed there was little evidence of panic within both businesses and households.
He went on to say that the falling pound will push inflation up. Politicians and economists have experience of inflation and can deal with it – it is deflation and negative interest rates they have no experience with.
PwC has confirmed that the economic downturn will not be as worse as the credit crunch years and the pound will help exporters and deal with the current account deficit. There will perhaps be a lag though as import costs will be higher thus widening the deficit. The falling pound and inflation will need to be looked at very carefully especially with consumer sentiment and behaviour.
The considerations that business rates could be reduced is great news for business. Also businesses are very keen on how consumer sentiment is handled. If consumers are calm and spending then businesses are happy because obviously they do better than when consumers are worried and not spending.
The economy has been through enough tough times since the banking crisis or credit crunch of 2008. The UK seems to have had a self-imposed economic brain wobble but as we keep saying to investors and businesses alike, don’t panic and trust in your long term plans and objectives.
Begbies Traynor, the business recovery and rescue experts, consider the United Kingdom (UK) is in a good position to withstand the political turmoil that is impacting the UK economy at the minute; but there are potential sectors that may have a red flag.
he consideration is noted as six months of a worsening economic environment with a stabilisation to the “new normal”. Property is considered a challenging environment with experts saying London property prices could fall as much as 20 per cent and 50,000 businesses are already feeling some financial distress.
The prime minister has also been up to Scotland to soothe the political big fish and the Scottish people, detailing her commitment to a United Kingdom and global relationships including the European Union (EU) but not as a part of the EU. A commitment including those that voted to remain like Northern Ireland and Scotland.
Whilst the oil price is keeping the North Sea and Scottish businesses on their toes because of impacting the bottom line. It’s nice to see the prime minister's fuel bill and travel commitments are doing their bit to contribute.
The mayor of London and the prime minister Theresa May have recruited business leaders like Richard Branson and actors and musicians to shout to the outside world that #londonisopen. The theme is, invest in London, visit and spend.
It’s strange to note but the writer was in a business meeting this week, where a Local Enterprise Partnership representative confirmed that the areas which had received most European grants had a majority vote leave rather than remain.
There is a whole set of nations outside of London and the point we are trying to make is the UK is split almost but not quite, down the middle. We are not sure what information was relied upon for either side. Perhaps the people and the politicians are confused? It seems so.
Can we rely on any certainties in this environment of uncertainty?
In the financial world as a consumer you will have similar objectives. Although requirements will differ dependent on your age, family and money available, saved or inherited; you will all need solutions that allow you to spend, borrow or save and invest. Tax efficiency and risk need to be factored in but all in all we are accumulating for the future and security.
Would you trust a referendum on your future financial security or would you like to be advised by an expert and make your own informed decisions?
Nothing is certain but with advice and planning you can perhaps avoid a personal recession in your future.
:: Darren McKeever (dmckeever@ wwfp.net) is Northern Ireland adviser of Worldwide Financial Planning, which is authorised and regulated by the Financial Services Authority. For a free, no obligation initial chat about your individual finances, call 028 68632692, e-mail info@wwfp.net or click on www. wwfp.net. Follow us on Twitter: @WorldwideFP
