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October Market Commentary

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October Market Commentary

Wednesday, October 4th, 2023


Sluggish growth and high inflation have stubbornly persisted across much of the globe in recent months, and September was no different.

But some major economies are performing better than others as they grapple with global economic headwinds, and emerging markets in Asia are bucking the prevailing trend by enjoying strong rates of growth.

As always, let’s take a look at the details…


The UK economy shrank by 0.5% in July, according to the Office for National Statistics (ONS). This was worse than many analysts had been predicting, and was driven by factors including ongoing industrial action and poor weather.

However, there was some good news to be found elsewhere, as inflation fell from 6.8% in July to 6.7% in August. This was the third consecutive month in which inflation has come down.

Nevertheless, a new report from the Organisation for Economic Co-operation and Development (OECD) suggests there is no room for complacency, as it warned prices will rise faster in the UK this year than in any other advanced economy.

The OECD predicts that inflation will average at 7.2% in 2023, a higher rate than in the likes of the US, Germany, France, Italy, Japan and Canada.

August’s surprise fall in inflation influenced the Bank of England’s unexpected decision to keep interest rates on hold at 5.2%, following 14 consecutive rate hikes.

Andrew Bailey, Governor of the Bank of England, said there were “increasing signs” that higher rates were harming the UK economy, an observation borne out by recent house price figures.

According to Nationwide, property values in August 2023 were 5.3% lower than they had been 12 months earlier. This was the biggest year-on-year decline since 2009 and was attributed in part to higher borrowing costs.

Weak economic growth was not reflected in the latest wage figures, which revealed total earnings in the three months to July 2023 were 8.5% higher than they had been a year earlier.

Similarly, August saw a surge in retail sales, according to the British Retail Consortium and KPMG, as sales on non-food items rose to their highest level since February.

The retail sector recently took a knock with the collapse of high-street retailer Wilko. However, it has now been confirmed that Poundland owner Pepco Group will take on the leases at up to 71 Wilko stores, with Wilko staff being given priority when applying for jobs at these outlets.

Elsewhere in the retail sector, Mike Ashley’s Frasers Group is reportedly in discussions about selling its Missguided clothing brand to fast fashion company Shein, just a year after purchasing the brand for £20m.

There was a big development in the UK’s manufacturing industry, as German car company BMW confirmed it is to begin production of two new electric Mini cars at its factory in Oxford. About £600m is to be spent on updating its plant in Cowley in order for production to begin in 2026.

September was a turbulent month for the UK’s finance sector, with the state-owned British Business Bank reporting an annual pre-tax loss of more than £147m. This, it said, was because a “challenging economic environment” led to the valuation of businesses it has invested in falling.

Meanwhile, the ongoing controversy over the closure of former UKIP leader Nigel Farage’s Coutts account rumbled on, with the Financial Conduct Authority saying it has not found any evidence that politicians’ bank accounts are being closed because of the views they hold.

The London Stock Exchange was recently dealt a blow when chip designer Arm Holdings opted to list its shares in the US rather than the UK. The company’s market value soared to £48.3bn upon its return to the stock market as investors snapped up shares.

The pound ended August up 0.2% against the dollar, and on the financial markets, the FTSE-100 Index ended the month at 7,648 points, up 2.46% on August.


Ukraine’s President Volodymyr Zelensky addressed the UN General Assembly in New York in September, in which he called on the world to unite behind his country in the face of the ongoing Russian invasion.

He also visited Canada during his latest round of international diplomacy, which comes at a time when discussions of “war fatigue” are growing in many of the nations that have, thus far, backed Ukraine, such as Poland.

In a reflection of its continued solidarity, the US has agreed a £265m military package with Ukraine, although this itself came after a disagreement in Congress about how much money it was willing to spend.


September saw the European Central Bank raise eurozone interest rates for the tenth time in a row from 3.75% to 4%. The move, which was taken in response to continuing high inflation, takes interest rates to a record high.

Germany continues to struggle in the face of the weak global economy and inflationary pressures, as it slipped into a technical recession in the first quarter of 2023. The OECD believes Germany will be the only G20 economy apart from Argentina to see its economy shrink this year.

Unsurprisingly, the gloomy environment is having an impact on business sentiment, which fell for the fifth month in succession during September, according to the Ifo institute.

Peter Oppenheimer, chief global equity strategist and head of macro research EMEA at Goldman Sachs, believes Germany’s problems are down to a number of factors, such as high energy costs, weak growth in China following the easing of Covid restrictions and continuing challenges in the manufacturing sector.

Speaking to CNBC, he said: “It’s … not a deep recession but it’s obviously been more hit by obvious headwinds.”

The German Bundesbank agrees that Germany’s reliance on China is partly behind its current problems, and said this is one reason why its “business model is in danger”.

In France, supermarket chain Carrefour has taken the unusual step of naming and shaming products where packet contents are getting smaller while prices are going up.

The company is putting stickers on the shelves of offending products, which include Vienetta ice cream and Lipton Ice Tea, to warn customers of “shrinkflation” and letting them know if the packaging is smaller or the contents are lighter.

Carrefour hopes this strategy will give companies an incentive to keep the prices of their products down. Director of Client Communications Stefen Bompais said: “Obviously, the aim in stigmatising these products is to be able to tell manufacturers to rethink their pricing policy.”

September also saw an interesting development as the UK’s opposition leader Sir Keir Starmer met with French President Emmanuel Macron in Paris. The meeting, which was described as “very constructive and positive”, comes as Sir Keir’s Labour Party is riding high in the opinion polls at home and he is aiming to position his party as a government in waiting.

On the financial markets, pharmaceutical giant Novo Nordisk, manufacturer of weight loss drug Wegovy, has become Europe’s most valuable company, achieving a stock market valuation of £339n at the close of trading on Monday 4th September.

On the financial markets, Germany’s DAX index fell by 2.65% in September to end the month at 15,508 points. Meanwhile, the French CAC 40 index fell by 2.35% to end at 7,200 points.


Gross domestic product in the US grew by 2.1% in the second quarter of 2023. This was thanks in part to increased consumer spending, as well as an increase in state, local and federal government spending.

Speaking to MSNBC’s Morning Joe programme, Treasury Secretary Janet Yellen said: “We’re investing in America in ways we haven’t seen for decades.”

However, she acknowledged that there is a “disconnect” between how the economy is performing and how the American public feel about how it has been handled by President Joe Biden.

A poll of registered voters by the Wall Street Journal revealed three-fifths of people disapprove of Biden’s handling of the economy, while nearly two-thirds don’t like how he has handled inflation, which rose from 3.2% in July to 3.7% in August.

The Federal Reserve, meanwhile, kept its key interest rate on hold at 5.25% to 5.5%, as it aims to bring inflation under control.

Ms Yellen said it will “take some time” before people feel more positive around the economy and feel the effects of the Biden administration’s legislation and policies.

The jobs market is one bright spot in the US economy right now, with official figures showing that employers added 187,000 jobs in August – the same number as in July. President Biden hailed the figures, saying the US is “now in one of the strongest job-creating periods in our history”.

“Some experts said to get inflation under control, we needed higher unemployment and lower wages, but I’ve never thought that was the problem,” President Biden added.

One factor that has been putting the brakes on economic growth in recent months is industrial action in various sectors, including the automotive industry, where members of United Auto Workers have withdrawn labour.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, believes the immediate impact of the auto workers strike will be “limited”, but said “that will change if the strike broadens and is prolonged”.

Hollywood writers, meanwhile, have ended their strike after almost five months, after the Writers Guild of America reached a tentative agreement with the Alliance of Motion Picture and Television Producers on issues such as pay and the use of artificial intelligence.

While this means writers are free to return to work, many productions will still be unable to resume, as the Screen Actors Guild remains on strike and no deal has yet been struck.

In the tech sector, the ongoing drama surrounding X, formerly known as Twitter, continued, when owner Elon Musk suggested that users may soon be charged each month to use the platform. Meanwhile, Apple’s share valuation took a hit after reports that government workers in China were banned from using iPhones.

On the financial markets, the Dow Jones fell by 2.96% to end the month at 33,821, while the more broadly-based S&P 500 index fell by 4.40% to end at 4,299.

Far East

China’s economic recovery remained sluggish, which was reflected in a fourth consecutive monthly fall in exports. According to official figures, exports in August 2023 were 8.8% down on the previous year, while imports fell by 7.3%.

Nevertheless, a poll of 78 economists by Bloomberg suggested that China will meet its economic growth target of 5% this year.

One major drag in the Chinese economy has been the crisis-hit property market. The problems at Chinese property giant Evergrande continued throughout September, as shares in the company were suspended after its chairman was reportedly placed under police surveillance. This came in the wake of the company filing for bankruptcy protection in the US, after it defaulted on its debts two years ago.

Another major Chinese property developer – Country Garden – saw a surge in its share values after securing an extension to a key debt payment deadline. This came after the company reported a £5.2bn loss for the first half of 2023, which it described as an “unsatisfactory performance”.

Meanwhile, the Chinese government’s crackdown on corruption in the financial sector continued with the imprisonment of Wang Bin, the former chairman of China Life Insurance. Mr Wang was found guilty of taking £35.7m in bribes earlier this year.

In Japan, Prime Minister Fumio Kishida announced that a new economic stimulus package designed to ease the impact of inflation will be put together in October. Mr Kishida has instructed his cabinet to also devise measures that could help to increase wages, although no indication of the possible size and scale of the package has yet been disclosed.

This comes as the Japanese government aims to discourage investors from trying to sell off the yen. Mr Kishisa said: “It’s important for currencies to move stably reflecting fundamentals. Excessive volatility is undesirable.”

There was more positive news for Japan’s space programme, after the country successfully launched a rocket with a lunar lander, in preparation for a planned moon landing in February next year.

India recently became only the fourth country to successfully land a spacecraft on the moon’s surface, after the US, Russia and China, and Japan is bidding to become the fifth.

South Korea, meanwhile, has been stepping up its efforts to increase its global influence, with President Yoon Suk Yeol spending five days in the US engaged in talks on foreign policy. His trip also included a keynote address at the UN General Assembly in New York.

This came as the country continued its bid to host the 2030 World Expo, a global showcase of cultural, commercial and technological accomplishments, in Busan.

On the financial markets, Hong Kong’s Hang Seng index fell by 3.65% to end August at 17,809. Meanwhile, Japan’s Nikkei index slumped by 1.15% to 31,857. China’s Shanghai Composite index fell by 0.81% to 3,110 and the Korea Composite Stock Price Index went down by 1.92% to 2,249.

Emerging Markets

India continued to enjoy strong growth, with official figures showing its economy expanded by 7.8% between April and June 2023 year-on-year. This was up from 6.1% in the previous quarter.

V. Anantha Nageswaran, India’s Chief Economic Adviser, is therefore confident the country is still on course to achieve 6.5% growth this year, saying that “growth prospects appear bright”.

This sense of optimism was bolstered by new estimates from the OECD, which raised its gross projection for the 2023-24 financial year from 6% to 6.3%.

According to the OECD, India’s strong performance is likely to help Asia drive “a disproportionate share of global growth in 2023-24”, despite the “weaker than expected” recovery in China.

Finance Minister Nirmala Sitharaman is similarly confident, telling the Business Standard newspaper that India is likely to achieve its growth target of 10.5% this fiscal year.

Global trade will be a key factor that supports India’s economic growth in the coming growth, and talks over a possible trade deal with the UK have been ongoing in recent months.

India recently hosted the latest G20 summit, during which UK Prime Minister Rishi Sunak confirmed “we’re not there yet” regarding a possible deal.

Brazil is another emerging market that is bucking the wider global trend, with the Central Bank recording stronger than expected growth in 2023. The country’s finance ministry has also raised its GDP growth projection for 2023 from 2.5% to 3.2%.

This was driven partly by a strong performance in the agriculture and service industries, while industrial output also exceeded expectations.

In sanction-hit Russia, efforts to bolster international support amid the ongoing war in Ukraine continued.

Russian Foreign Minister Sergei Lavrov met with Chinese diplomat Wang Yi in Moscow, a move which reinforced the view among critics of China that Beijing indirectly backs the invasion. President Vladimir Putin, meanwhile, met with North Korean leader Kim Jung Un, where they discussed possible military cooperation.

On the financial markets, India’s BSE Sensex index rose by 0.67% to end at 65,828 points. Russia’s MOEX index fell by 2.90% to close at 3,118 points, while Brazil’s Bovespa index ended the month at 116,603 points.

And Finally…

You might have thought aliens had finally landed on earth in recent weeks, but as ever, proof that extraterrestrials are walking among us proved elusive.

Mummified remains discovered in the city of Cusco, Peru were displayed in Mexico recently, but UFO enthusiasts became convinced they had stumbled across the body of an alien lifeform.

However, Mexican doctors disappointed the alien hunters by insisting the two alleged extraterrestrial corpses each belonged to a single skeleton.

But this wasn’t the only would-be close encounter to hit the headlines, as a family in Las Vegas have spoken out about apparently seeing two ten-foot tall aliens in their back garden.

In an interview with Inside Edition, dad Bobby and 16-year-old Angel both presented drawings of the beings they claimed to see. But curiously, the two images didn’t actually look much like each other, so who knows what they actually did or didn’t see…?

Why asset allocation matters

Friday, September 22nd, 2023

Investing is an uncertain pursuit, as you have to carefully navigate an ever-changing financial climate.

Perhaps the only certainty is that the value of your investments will go up as well as down, so it’s really important that you allocate your assets carefully to help you stay on course.

So what key issues should you be considering when you’re making these crucial decisions?

Exposure to risk

If your portfolio is based around only a few asset classes, you could lose large sums of money if any of these experience a downturn.

It’s therefore really important to diversify your portfolio across many different asset classes, so you can limit your exposure to risk in the event of a downturn and preserve your capital even during the most challenging times.

Maximising your returns

You can achieve higher returns if you optimise your portfolio around the best performing options, so you’re able to take advantage of growth in certain markets and move away from weaker alternatives.

Make sure your portfolio matches your goals

It’s important that your investment portfolio reflects your wider financial objectives. Perhaps you want to send your child to private school or university, or maybe you’re looking to buy a second home or save up for retirement.

By thinking about the spread of your assets through this lens, you can build a portfolio that helps you work towards and achieve your specific objectives.

Adapting as circumstances change

Your investment portfolio doesn’t operate in a vacuum. In fact, it can be affected by countless factors way beyond your control, from economic shifts to political upheaval at home and abroad.

With that in mind, it’s really important to be flexible and adjust your portfolio when it’s appropriate to do so.

However, it’s crucial that you don’t panic in the face of market movements, as making impulsive decisions could backfire on you. Think carefully and strategically about adjusting your asset allocation and keep a firm eye on the long-term, and stay informed so you can respond to both opportunities and risks in the right way.

Your age

If you’re five years away from retirement, you might have a different appetite for risk than someone who’s forty years off stopping work.

So if you’re a younger investor, you can probably afford to favour higher-risk, higher-reward assets such as stocks, whereas an older person might prefer safer alternatives.

Creating and managing a lucrative investment portfolio can seem a daunting task, particularly if you’re new to investing.

We’re here to guide you throughout the entire process, so please get in touch with our team of friendly, specialist financial planners.

We’ll be happy to answer any questions you have, so you can get started on this exciting and potentially lucrative journey.


July Market Commentary

Wednesday, July 5th, 2023


Sluggish growth and high inflation were recurring themes in many major and emerging economies last month, as central banks across the globe sought to manage the impact of global economic headwinds. But interestingly, many emerging markets bucked this trend.

As always, let’s take a closer look at the details.


The UK economy saw surprise growth of 0.2% in April 2023, despite many analysts predicting a decline. However, other positive economic news has been hard to find in recent weeks, with the Bank of England raising interest rates by half a percentage point to 5% – the highest level in 15 years.

Chancellor of the Exchequer Jeremy Hunt argued that the UK has “no alternative” but to hike interest rates in order to tackle inflation, which remained stuck at 8.7% in May – the same as in April. This has caused huge concerns about the impact of rising mortgage rates, which led to the bank bosses meeting with Mr Hunt, and agreeing to offer more flexibility to mortgage holders who are struggling to keep up with their payments. Prime Minister Rishi Sunak, meanwhile, called on homeowners and borrowers to “hold their nerve” over rising interest rates.

The wider economic situation led to annual house prices falling for the first time in 11 years, according to UK’s largest mortgage lender Halifax. Figures showed typical house prices in May were £3,000 down on the previous year. However, retail sales did hold up, with the Office for National Statistics reporting that sales volumes rose by 0.3% in May, partly because of better weather in the second half of the month.

Energy prices have also been a huge contributor to the ongoing cost of living crisis, but the government has confirmed that if prices fall to normal levels for a sustained period, its windfall tax on oil and gas firms – which has helped to fund a support scheme for struggling households and businesses – will be scrapped.

On the international stage, Rishi Sunak and US President Joe Biden unveiled the Atlantic Declaration. While this is some way short of the full trade deal that the British government has hoped for following Brexit, it does still represent a strengthening of economic ties between the UK and the US.

The UK has also signed a new pact with the European Union, which will see the two parties meet twice a year to discuss financial regulation and standards. Mr Hunt believes this forum will be mutually beneficial, as the UK and EU financial markets are “deeply interconnected”.

It was a difficult month for the London Stock Exchange, with natural soda ash producer We Soda scrapping plans to sell shares on the index, and cinema chain Cineworld confirming it is to file for administration and suspend trading on the London Stock Exchange as part of a major bankruptcy restructuring plan. This comes shortly after microchip designer Arm Holdings opted to list its shares in the US rather than London.

There was brighter news in the mobile phone sector, with Vodafone and Three agreeing a deal to merge their operations and create the country’s biggest mobile phone operator.

The pound ended June up 0.82% against the dollar, and on the financial markets, the FTSE-100 Index ended the month at 7,544 points, up 1.32% on May.


Global leaders and bodies such as the World Bank attended the Ukraine Recovery Conference in June to discuss what can be done to rebuild the war-torn nation.

World Bank Managing Director of Operations Anna Bjerde pointed out that Ukraine will need the help of the international community for many years. However, she told the BBC that the country also has great potential to turn “a lot of its assets into economic opportunity and recovery”.

Among the topics under debate was the idea of fast-tracking Ukraine’s entry into Nato, which the British government said it supports.

Ukraine’s President Volodymyr Zelensky addressed the conference by video link, and told attendees that Ukraine could be “the largest source of economic, industrial and technological growth in Europe for decades and decades”.

The meeting came amid a military counter-offensive to recapture Russian-occupied areas of the country, which President Zelensky has admitted has led to slower progress than he hoped for.


The European Central Bank (ECB) increased its benchmark rate of interest by 0.25 percentage points to 3.5% – its highest level in more than 20 years. The cost of borrowing is being hiked as part of an effort to tackle inflation, which fell from 6.1% in May to 5.5% in the year to June – a welcome fall but still a stubbornly high figure.

Rising prices led to the eurozone falling into recession over the winter, official figures have revealed, with the 20-nation bloc’s economy shrinking by 0.1% between January and March. This followed a contraction in the final three months of 2022. Falling household spending contributed to the drop in economic output, as this fell by 0.3% in the first quarter of 2023, following a 1% slump in the previous three months.

There was some positive news, however, with the ECB reporting that the international role of the euro was resilient in 2022, with its share across multiple indicators of international currency use averaging close to 20%. This means the euro is still the second most widely used currency, despite high inflation and geopolitical problems such as the Russian invasion of Ukraine.

The invasion has led to another problem for the EU, as member states are set to be asked to make bigger budget contributions following recent crises. Johannes Hahn, Commissioner for Budget and Administration, argued that the EU budget has been “instrumental” to its recovery from the pandemic and continued support for Ukraine. However, he said “the multiple challenges over the past years have exhausted its flexibilities and capacity to react to future crises”.

Europe’s largest economy, Germany, has been in particular difficulty over the last few months, but the German Bundesbank believes its recession will end in the April to June quarter, thanks to factors such as improving supply chains and falling energy prices. The Bundesbank has predicted that GDP will fall by 0.3% across the whole of 2023, but grow by 1.2% in 2024 and 1.3% in 2025.

Ireland also provided some positive economic news for the EU, as its economic output went up by 2.7% in the first quarter of 2023, compared with the final quarter of 2022.

On the financial markets, Germany’s DAX index rose by 3.14% in June to end the month at 16,156 points. Meanwhile, the French CAC 40 index went up by 4.39% to end at 7,410 points.


All eyes were on the US Congress after a deal to lift the country’s borrowing limit was agreed. The US had risked defaulting on its £25trn debt had the measure not been approved by the Senate and the House of Representatives.

Interest rates remained another key focus of attention, as the US Federal Reserve opted against increasing the cost of borrowing for the first time in over a year. The benchmark rate remained at 5%-5.25%, as the Fed wants time to assess the effects that previous rate hikes have had in recent months.

However, interest rates do not look set to remain at this level for much longer, as many analysts are forecasting further increases in the coming months. Inflation, meanwhile, fell from 4.9% in the year to April to 4% in the year to May, according to official figures, which means the rate of inflation has now fallen for 11 months in a row.

Curiously, high inflation and interest rates failed to dent job creation in the UK, with employers adding 330,000 jobs in May. This has led to some analysts becoming increasingly confident that the economy could avoid slipping into recession this year, although figures also showed that the unemployment rate rose from 3.4% to 3.7% month-on-month.

According to a poll by The Associated Press and NORC Center for Public Affairs Research, just 34% of US adults currently approve of President Biden’s handling of the economy. Against this backdrop, the President has been talking up his economic approach, which has been termed “Bidenomics”, which involves growing the economy “from the middle out and bottom up, not the top down”.

Business activity in the UK expanded in early June, according to the latest S&P Global Composite Purchasing Managers Index. However, the index fell 1.3 points to 53, which indicates growth is at its slowest level in three months, partly because of a decline in manufacturing activity. Chief Business Economist Chris Williamson said: “Growth remains dependent on service sector spending. The question remains as to how resilient service sector growth can be in the face of the manufacturing decline and the lagged effect of prior rate hikes.”

Nevertheless, small businesses in particular appear to be quite confident about the future. According to the latest MetLife and US Chamber Small Business Index, a record 71% of small business owners expect to see an increase in revenue over the next year, while the share of respondents expecting to hire more staff in the coming 12 months has gone up from 37% in Q1 to 47% in Q2.

On the financial markets, the Dow Jones rose by 4.52% to end the month at 34,376, while the more broadly-based S&P 500 index went up by 6.22% to end at 4,439.

Far East

China’s National Bureau of Statistics has revealed that the country’s industrial output went up by 3.5% in May year-on-year. This was slightly down on the 5.6% increase seen in April, indicating that demand for Chinese manufactured goods is easing both domestically and worldwide. Retail sales, meanwhile, also dropped off slightly, falling from 18.4% growth in April to just 12.7% in May.

Commenting on the figures, analysts at Nomura said the post-Covid recovery “appears to have run its course” and that “an economic double dip is nearly confirmed”. Nevertheless, Chinese premier Li Qiang remains bullish, insisting that the country remains on course to achieve its economic growth targets of 5% this year.

Ongoing diplomatic tensions with the US continued to cast a shadow throughout June, although a visit by US Secretary of State Antony Blinken to Beijing saw both sides seek to improve their relationship.

President Xi Jinping said progress had been made and Mr Blinken stated that while there are major differences between the two nations, both sides are open to additional talks.

Shortly after Mr Blinken’s visit, President Biden criticised President Xi, referring to him as a “dictator”, who was embarrassed after the US shot down an alleged Chinese spy balloon.

Thankfully, there appears to be little appetite for any escalation, as China’s Defence Minister General Li Shangfu said war with the US would be an “unbearable disaster” for the world. He added that the Earth is big enough for both nations and that they should try to find common ground.

Against this backdrop, Microsoft co-founder Bill Gates met President Xi in Beijing. However, iPhone maker Foxconn has said it is planning for the worst-case scenario in case relations between Washington and Beijing deteriorate further by moving some of its supply chains away from China.

Speaking to the BBC, Foxconn Chairman Young Liu said: “We hope peace and stability will be something the leaders of these two countries will keep in mind, but as a business, as a CEO, I have to think about what if the worst case happens?”

In Japan, gross domestic product went up by 2.7% in the first three months of the year, exceeding forecasts from economists polled by Reuters of 1.9%. This was fuelled partly by a 1.4% increase in capital spending, although exports and imports both fell by 4.2% and 2.3% respectively.

The Bank of Japan remains cautiously optimistic about the economic outlook, saying it expects to see a moderate recovery this year. However, it noted that the global economy and markets pose a risk to Japan’s future growth.

South Korea, meanwhile, saw minimal growth of just 0.3% in the first quarter of the year. However, this was enough to prevent the country slipping into recession, following a 0.4% contraction in the final three months of 2022.

The Bank of Korea has revised down its 2023 growth forecast of 1.4% slightly, partly due to sluggish conditions in its semiconductor industry, which Bank Governor Rhee Chang Yong said is “pivotal to our exports”. He also noted that exports to China are not “picking up as fast as we wish”, although he was hopeful the overall economic growth rate would pick up in the second half of the year.

On the financial markets, Hong Kong’s Hang Seng index rose by 3.74% to end June at 18,916. Meanwhile, Japan’s Nikkei index rose by 7.45% to 33,189. China’s Shanghai Composite index fell by 0.08% to 3,202 and the Korea Composite Stock Price Index fell 0.50% to 2,564.

Emerging Markets

Foreign ministers from Brazil, Russia, India, China and South Africa met in Cape Town to call for the global order to be rebalanced away from western countries. Speaking at the meeting, Brazil’s Foreign Minister Mauro Vieira described the Brics nations as an “indispensable mechanism for building a multipolar world order that reflects the devices and needs of developing countries”.

Brazil has seen impressive economic growth in recent months, with the Central Bank’s economic activity index showing growth reached 0.56% in April. This was the biggest monthly increase since December 2013 and well above many analysts’ expectations.

Brazil’s President Luiz Inacio Lula da Silva is confident about the country’s economic outlook, saying he expects to see growth of at least 2% this year. Speaking after S&P revised its outlook for Brazil from “stable” to “positive”, he said the nation is regaining its international credibility under his leadership.

Meanwhile, S&P is expecting India to be the fastest-growing economy in the Asia Pacific region during 2024, with growth likely to be about 6%. Louis Kuijs, Asia-Pacific Chief Economist at S&P Global Ratings, said: “The medium-term growth outlook remains relatively solid. The Asian emerging market economies remain among the fastest growing ones in our global growth outlook through 2026.”

Fitch Ratings is also confident about India’s outlook, raising its growth forecast for the current fiscal year from 6% to 6.3%. In a statement, it described India as one of the fastest-growing economies in the world, as it is benefiting from “high bank credit growth and infrastructure spending, with more to come from the latter”.

The Indian government has sought to build on this strong performance by consolidating its global relationships. June saw Prime Minister Narendra Modi go on a state visit to the US, where he met with President Biden and enjoyed a lavish reception at the White House.

India’s tech sector, meanwhile, received a boost when Foxconn announced it would start manufacturing iPhones in the state of Karnataka by April 2024, in a move that will create around 50,000 jobs.

In Russia, President Vladimir Putin’s grip on power was questioned after Yevgeny Prigozhin, head of mercenary group Wagner, staged an apparent mutiny. Following a day in which Wagner fighters moved towards Moscow, the insurrection was eventually called off. Commenting on the rebellion, Antony Blinken said it represented a “direct challenge” to Mr Putin that shows “real cracks” in his authority.

As Russia continues with its assault on Ukraine and continues to suffer global sanctions, the economy looks set to suffer, with Bloomberg Economics predicting growth of just 0.8% this year. By contrast, Russia’s central bank is forecasting growth of 2% in 2023.

This comes as Russia aims to raise about 300bn rubles by imposing a one-off windfall tax on big companies. It is hoped the move will boost its coffers after posting a first-quarter deficit of nearly 2.4trn rubles.

On the financial markets, India’s BSE Sensex index rose by 3.47% to end at 64,718 points. Russia’s MOEX index rose by 2.63% to close at 2,789 points, while Brazil’s Bovespa index ended the month at 119,110 points.

And Finally…

Many of us might have wondered how people would react if we died suddenly, but one Belgian TikToker took it a step further by faking his own death. His wife and children, who were in on the prank, announced news of his “death” on social media, and even went as far as holding a fake funeral to see who would turn up and hear what they really thought of him.

Staying on the funeral theme, funeral firm Go As You Please is offering people the chance to pick their own custom-made coffins before they die. Among the suggested themes for the caskets are a Greggs sausage roll, a pint of Tennent’s Lager and Doctor Who’s Tardis. Each to their own…

To end on a lighter note, spare a thought for Iain Grant, 49, who ordered a curry online after arriving in Falmouth, Cornwall for a holiday. So far, so good, but upon arriving at the restaurant, it was clearly closed. Although he admitted to seeing the funny side, he was clearly incensed enough to contact the newspapers to share the details of his ordeal.

What are asset classes?

Friday, June 2nd, 2023

Asset classes are a way of classifying investments into groups.

These groups will feature separate individual investments that will behave similarly, but their performance can vary for many reasons.

Let’s take cash, for example.

Cash is the overall asset class, but it can be held in different ways. You might have cash in your current account and money in a cash ISA.

So while they’re both in the same asset class and have broadly similar characteristics, they will be used for different purposes, and the outcome of each investment is likely to be different.

Similarly, stocks and equities are considered to be the overall asset class, but this can encompass many different kinds of investments.

For instance, you can hold stocks in a fund or have individual shares in a company. And there are all the individual options, such as companies to buy and sell.

But they’ll all come under the same overarching category.

Ideally, an investor will have a mixture of asset classes in their financial plan, such as cash, stocks, bonds, property and commodities like gold.

By having a diverse range of assets in your portfolio, you can be more resilient in the face of sudden shocks, such as economic difficulties or a crash in one specific market.

By making sure you’re not exposed to high levels of risk in one area, you’ll be in the strongest possible position to achieve your financial goals.

We hope you find this little explainer useful.

As financial advisers, we often deal with lots of technical terms and industry jargon that can be difficult to get your head around.

Our job is to make sure you fully understand what’s going on and can make any decisions with your eyes wide open.

So if you have any questions about what certain terms mean and how they’re relevant to you and your finances, please don’t hesitate to get in touch.

June Market Commentary

Friday, June 2nd, 2023


Economic growth remained subdued at best in many major markets throughout May, as high inflation continued to affect households and businesses across the world and hit confidence.

But significantly, some emerging markets such as India have bucked this trend and seen impressive rates of growth.

As always, let’s take a closer look at the details to find out more about what’s been happening over the last month…


The UK saw weak economic growth of just 0.1% in the first quarter of 2023, with output hit by factors including poor weather and industrial action. Although the economy remains smaller than it was pre-pandemic, the Bank of England is confident about its prospects and believes the UK will avoid slipping into recession this year.

The International Monetary Fund also believes the country will not see a recession, and upgraded its growth forecast for 2023 from 0.3% to 0.4% However, it warned that inflation is still “stubbornly high” and that interest rates will need to remain high if it is to come down. According to official figures, the UK inflation rate fell from 10.1% in March to 8.7% in April, which is the first time it has fallen below 10% since last August.

Meanwhile, the number of people on UK employers’ payrolls fell by 136,000 between March and April. This was the first drop since February 2021 – and suggests that the labour market is now feeling the impact of subdued economic growth. By contrast, house prices in the UK rose by 0.5% in April, according to Nationwide, following seven consecutive monthly declines, raising hopes of a slight recovery in the housing market over the coming months.

It was a mixed picture among UK businesses, with bakery chain Greggs reporting a 17% increase in sales year-on-year. By contrast, online fashion retailer Asos saw a 10% drop in sales during the six months to the end of February year-on-year, and posted a loss of more than £87m. BT, meanwhile, announced it was seeking to cut costs by cutting up to 55,000 jobs over the next few years, with many outgoing customer services staff being replaced by artificial intelligence.

Unsurprisingly, oil and gas companies continued to perform strongly, with Shell reporting profits of £7.6bn in the first quarter of 2023, and BP seeing profits of £4bn over the same period. This was despite energy prices coming down slightly in recent months.

The impact of Brexit continued to loom large in the business community, with carmarker Stellantis warning it may have to close factories in the UK if the government doesn’t negotiate a new deal with the EU. The company, which owns Fiat, Citroen, Peugeot and Vauxhall, said that under the current deal, it would face tariffs of 10% on exports to the EU from next year.

Despite ongoing concerns over the effects of Brexit on the economy, there was good news for the UK capital when London came top of Brand Finance’s new City Index, making it the best city brand in the world.

Although London is clearly well regarded around the globe, concerns have been raised about businesses choosing to list in the US rather than the UK. British technology firm Arm, for example, recently filed to list its shares in the US rather than London. In response to these worries, the Financial Conduct Authority (FCA) confirmed plans to revise and simplify listing rules to encourage more companies to list shares on UK stock markets.

The pound ended May down 0.3% against the dollar, and on the financial markets, the FTSE-100 Index ended the month at 7,458 points, down 5.23% on April.


President Volodymyr Zelensky met with leaders in Paris, London, Rome and Berlin in an effort to secure further military support for Ukraine. While they all committed to supplying extra weapons and equipment, they have so far ruled out sending Eurofighter jets to combat Russian forces.

May also saw the UK host the Eurovision Song Contest on Ukraine’s behalf, as the ongoing war meant it was impossible for last year’s winner to stage the competition itself. The event was another significant show of international support for Ukraine, but the hometown of Ukraine’s Eurovision act was struck by Russian missiles shortly before they were due to perform.


The European Commission revised its growth forecasts for EU members upwards, predicting that its 27 nations will see average growth of 1% in 2023 and 1.7% in 2024. Eurozone members, meanwhile, are expected to see growth of 1.1% this year and 1.6% next year.

However, these average figures hide a number of issues in individual member states. For example, the German economy shrank by 0.3% in the first quarter of the year, which sent the country into recession following a 0.5% contraction in the previous three months.

The French government announced a significant new measure to tackle climate change during May, banning domestic short-haul flights if train alternatives that take under two-and-a-half hours are available.

Meanwhile, the European Union has sought to prepare for climate change-related forest fires by doubling its supply of aircraft that can tackle blazes. Janez Lenarčič, the EU’s Commissioner for Crisis Management, said 2023 has already been “much drier than average” in places such as Spain, Portugal and the south of France, and that its 28 aircraft will be ready to act in what is expected to be a “busy, busy summer”.

In the technology sector, the clash between policymakers and artificial intelligence developers took a new turn, when OpenAI boss Sam Altman backed down on a threat to leave the European Union. Mr Altman had said he would leave the trading bloc if it imposed tough regulations on the AI market. According to the European Commission, agreement among member states on laws governing AI is likely to be reached this year, but it could be up to two years until these rules come into effect.

EU Internal Market Commissioner Thierry Breton has announced that social media giant Twitter has pulled out of its voluntary code to tackle disinformation, although the company itself has made no official comment.

On the financial markets, Germany’s DAX index fell by 1.61% in May to end the month at 15,665 points. Meanwhile, the French CAC 40 index fell by 5.24% to end at 7,099 points.


The US government has faced the very real prospect of running out of money and borrowing to keep funding essential operations. As a result, President Joe Biden has been working to reach an agreement on raising the debt ceiling, which has now been approved by the House of Representatives.

This comes amid a period of sluggish economic growth in the US, as GDP grew by just 1.3% between January and March 2023, when compared with the same period of the previous year. Inflation, meanwhile, dropped from 5% in the year to March to 4.9% in the year to April. That means inflation has slowed for ten months in succession.

The US Federal Reserve has been seeking to control inflation by raising interest rates, and at the start of May, its key interest rate was increased by 0.25%, taking the benchmark rate to between 5% and 5.25%. Despite the rising cost of borrowing, employers continued to create new jobs, with 253,000 jobs being added in April. The unemployment rate dropped to 3.4%.

Ongoing woes in the banking sector continued throughout May, with shares in PacWest and Western Alliance falling after recent banking failures led to a loss of confidence in sections of the market. The US Treasury Department has sought to ease concerns by insisting that the banking system has “substantial liquidity” and “deposit flows are stable”.

Elsewhere in the banking industry, First Republic was bought by JP Morgan Chase for $10.6bn after it was closed by the California Department of Financial Protection and Innovation and the Federal Deposit Insurance Corporation was appointed as receiver. It has subsequently been reported that about 1,000 jobs at First Republic will be cut following the takeover. Jobs are also expected to be lost in Silicon Valley Bank’s US Operations following its takeover by First Citizens.

In the technology sector, Apple saw a 3% drop in revenue during the first three months of 2023, when compared with the same quarter of 2022. That means sales at the tech giant have fallen for two consecutive quarters.

There was better news for the travel industry, with the White House confirming that international air travellers no longer have to show proof that they’ve received a Covid-19 vaccination.

On the financial markets, the Dow Jones fell by 3.89% to end the month at 32,771, while the more broadly-based S&P 500 index went up by 0.09% to end at 4,173.

Far East

China’s economic recovery following the end of Covid restrictions took a blow during May when its official manufacturing purchasing managers’ index fell to 48.8 in May, down from 49.2 in April. Any figure below 50 indicates contraction and means factory activity is now at its lowest level in five months.

However, China’s automotive industry was a relative bright spot for the economy, with official figures showing the number of car exports in the first quarter of 2023 was 58% higher than it had been a year earlier. 1.07m vehicles were exported from China between January and March, compared with 954,185 from Japan.

China also saw an upturn in domestic tourism, with people making 274m trips within the country during its five-day May Day holiday period. That’s nearly a fifth up on the number recorded in 2019.

The tourism industry received a further boost in May with the first commercial flight of the C919 plane. The aircraft, China’s first domestically-manufactured large passenger jet, was built by the Commercial Aviation Corporation of China and flew from Shanghai to Beijing on its maiden flight.

It was a different story at Chinese fast fashion brand Shein, as Republican and Democrat lawmakers in the US have called for the company to be investigated over claims that some of its clothes are made by Uyghur forced labour. Shein has insisted it has “zero tolerance” for forced labour, but the US lawmakers insist they have heard “credible allegations” against the firm.

Growing tensions between China and the US were also laid bare when China’s cyberspace regulator said that products made by US memory chip maker Micron Technology pose a serious national security risk. Products made by Micron will now be banned from major infrastructure projects being carried out in China.

Tesla chief executive Elon Musk visited China at the end of May for the first time in more than three years, and met with Foreign Minister Qin Gang and Industry Minister Jin Zhuanglong. China’s Foreign Ministry has confirmed that Mr Musk is seeking to expand Tesla’s presence in the country, which is the company’s biggest market outside the US.

China is not alone in seeing a slump in factory output, as industrial production in Japan fell by 0.4% in April, when compared with the previous month. This was a disappointing figure, as analysts had expected to see a rise in output of about 1.4%.

All eyes were on Japan during May when it hosted the G7 summit, where world leaders met to discuss issues such as further sanctions against Russia. The summit also saw Japan sign a renewed science and technology deal with the UK, which will see it deepen their relationship in this area.

The scale of attacks by North Korean hackers and ransomware users was highlighted in a new report by Elliptic, commissioned by Nikkei, which revealed that Asian nations account for nearly two-thirds of losses in these attacks. Japan alone accounted for 30% of the world total of over $2.3bn in 2022, seeing losses of $721m throughout the year.

In South Korea, President Yoon Suk Yeol had meetings with several international dignitaries in his diary. Canadian Prime Minister Justin Trudeau met with him to discuss boosting security ties and how to manage relations amid growing tensions between the US and China.

The President also met with European Council President Charles Michen and European Commission President Ursula von der Leyen during the 10th EU-Republic of Korea summit in Seoul. This marked the 60th anniversary of EU-South Korea diplomatic relations, where they discussed issues such trade, sustainable development and supporting Ukraine.

On the financial markets, Hong Kong’s Hang Seng index fell by 8.35% to end May at 18,234. Meanwhile, Japan’s Nikkei index rose by 7.04% to 30,887. China’s Shanghai Composite index fell by 3.57% to 3,204 and the Korea Composite Stock Price Index rose 4.66% to 2,357.

Emerging Markets

India’s economy accelerated to 6.1% in the first quarter of 2023, which means the country is now one of the fastest growing economies in the world. This is up from 4.4% in the previous quarter. Nevertheless, the Reserve Bank of India has suggested this impressive rate of growth might be hard to sustain, due to “slowing global growth, protracted geopolitical tensions and a possible upsurge in financial market volatility”.

May also saw Indian budget airline Go First file for bankruptcy. This was despite domestic air traffic in the country hitting a record high in the previous month, with 456,082 passengers flying on April 30th. Writing on Twitter, Aviation Minister Jyotiraditya Scindia said: “The skyrocketing domestic passenger traffic post-Covid is a reflection of India’s high growth.” Domestic airlines carried more than 37.5m passengers in the first quarter of 2023 – up 51.7% on the same period of 2022.

India’s burgeoning status as a technology hotspot hit the brakes slightly, as the International Data Corporation (IDC) reported that although 31m smartphones were shipped in India between January and March this year, this was 16% lower than in the same period of 2022. This was also the lowest first-quarter figure for four years, and was blamed partly on uncertainty over the economic outlook.

In sanction-hit Russia, the economy contracted by almost 2% in the first quarter of 2023 year-on-year. Match Group, owner of dating apps Hinge and Tinder, is the latest company to pull out of Russia in response to its invasion of Ukraine, and is aiming to have completely withdrawn from this market by the end of June.

Meanwhile, concerns about Russia’s revenues from oil and gas have been raised by Finance Minister Anton Siluanov, but this was downplayed by President Vladimir Putin, who attributed lower revenues to “voluntary cuts” in oil production, and said the situation was “absolutely stable”.

In Brazil, President Luiz Inacio Lula da Silva met with his counterparts from Colombia, Bolivia, Argentina and Chile at the South American Summit at Itamaraty Palace in Brasilia. The visit of Venezuelan President Nicolas Maduro was particularly notable, as he had been banned by former Brazilian President Jair Bolsonaro in 2019. “What’s important about Maduro coming here is that it’s the beginning of Maduro’s return,” President Lula said.

Meanwhile, the Brazilian government has declared a six-month animal health emergency following outbreaks of avian flu in Rio de Janeiro and Espírito Santo.

On the financial markets, India’s BSE Sensex index rose by 2.47% to end at 62,622 points. Russia’s MOEX index rose by 3.05% to close at 2,715 points, while Brazil’s Bovespa index ended the month at 108,564 points.

And Finally…

We’re used to seeing leaves and crisp packets flying around during strong winds, but during one particularly bad storm in Turkey, a sofa was blown off the balcony of a block of flats. The furniture was caught on camera flying through the sky for several seconds before crashing to the ground.

Another neighbourhood that saw disruption recently was Framlingham in Suffolk, where locals complained about the noise being made by a cockerel called Rory. Owner Julie Smith, who has been ordered to keep the noise down, is angry that “someone obviously has a problem with him”, as she claims that her neighbours have told her they can’t hear Rory if they shut their windows.

In other animal news, police in Colorado recently pulled over a speeding driver, but rather than accept his punishment, the motorist tried to switch places with…his dog! Needless to say, officers weren’t fooled and he was detained for driving under the influence of alcohol or drugs.

Get ready for the end of the tax year

Wednesday, March 1st, 2023

The end of the tax year is fast approaching and time is running out.

So in the weeks ahead of the April 5th deadline, what steps should you be taking to make the most of your money and reduce your tax bill?

Here are just a few areas you could look at.

Use your ISA allowance

You can save or invest up to £20,000 a year with a cash ISA, a stocks and shares ISA, or a combination of the two, tax-free.

If you haven’t invested this amount by April 5th, you can’t carry your allowance over and you’ll end up missing out.

Top up your pension contributions

You can pay up to £40,000 into your pension in a single tax year before you have to pay tax on it, so if you aren’t particularly near to this limit, diverting some money into your pension could be a good way to mitigate your wider tax bill.

Use Your Capital Gains Tax allowance

If you sell assets or personal possessions that are worth more than £6,000 – apart from your car – you must pay tax if the proceeds exceed £12,300.

Genuine gifts from a civil partner or spouse don’t count towards the allowance, so it’s worth checking where potential tax savings could be made.

Use your dividend allowance

A dividend allowance is an amount of dividends that you don’t have to pay tax on, which is currently £2,000. So if you’re a company director or shareholder, or get dividends through a Stocks and Shares ISA, you can receive up to this amount tax-free.

Use your Personal Savings Allowance

This allowance lets you earn interest on your savings without paying tax on it, but the size of the allowance depends on your income tax rate.

If you’re a basic rate taxpayer (20 per cent), you can earn £1,000 in savings interest per year tax-free, while higher rate taxpayers (40 per cent) can earn £500 in savings interest per year with no tax. Additional rate taxpayers (45 per cent) don’t get an allowance.

This is by no means an exhaustive list, and many of these options may not even apply to you.

That’s why it’s definitely worth speaking with a professional, regulated financial adviser with experience in this field. They can talk through the choices open to you to help you make the right decisions.

April 5th isn’t far away, so don’t delay!

November market commentary

Wednesday, November 16th, 2022


Where did we leave the soap opera that is British politics? At the end of September, Liz Truss was the Prime Minister, and Kwasi Kwarteng was her Chancellor. As we reported last month, Kwarteng presented his ‘fiscal statement’ on Friday 23rd September. 

Three weeks later, he was gone and Liz Truss had to endure the most public of humiliations as new Chancellor Jeremy Hunt fed her ‘plan for growth’, policy after policy, into the parliamentary shredder. Eleven days later, Truss offered her own resignation, replaced by Rishi Sunak, the man she had defeated in the race to succeed Boris Johnson. The shortest serving PM on record was replaced by the youngest for over a century, meaning that in 2022, the UK has had four different Chancellors and three Prime Ministers. 

There was, though, far more to the news than the UK – neither was it the only country to have a new leader. 

As we report below, October brought us the Communist Party Congress in Beijing – and confirmation that Xi Jinping is effectively ruler of China for life. The war in Ukraine continued – and the month ended with Russia pulling out of the grain deal agreed earlier this year, sparking fears of a threat to the world’s food supply. 

And as Russia gave the appearance of mobilising nuclear weapons, American President Joe Biden called it, “the most dangerous time since [the Cuban missile crisis of] 1962”. Finland indicated that it would be willing to host nuclear weapons on its border with Russia. 

How did the world’s stock markets react to all the news? It was a long way from the doom and gloom that might have been expected. All but two of the markets we cover in the Bulletin made gains in October: shares in China and Hong Kong, however, did not react well to Xi Jinping’s third term. As we report below, there are real fears that he will put political ideology, and his zero Covid policy, ahead of economic growth. 

As always, let us look at all the news and its impact on the stock markets we cover in the Bulletin. 


Many of the notes we made in the early part of the month – ‘Kwarteng to bring forward debt plan from November 23rd – were subsequently rendered irrelevant by the events mentioned above. The medium term fiscal statement, at one time due to be delivered on October 31st, has now been pushed back to Thursday November 17th and upgraded to a full Autumn Statement. 

The statement – which will come with forecasts from the Office for Budget Responsibility – is expected to detail billions of pounds worth of public spending cuts in an attempt to reassure the markets about the stability of the UK economy. The new Chancellor has said he is willing to take ‘politically embarrassing’ decisions. 

The beginning of October was turbulent, to say the least. Kwasi Kwarteng swiftly U-turned on his decision to scrap the 45p tax rate, saying it was a ‘distraction’. A day later, he was forced to bring forward his debt cutting plan from November 23rd. Small wonder that ratings agency Fitch downgraded its outlook for UK government debt from ‘stable’ to ‘negative,’ which put further pressure on the pound. 

Kwarteng’s position had become untenable and, as we reported in the introduction, the Prime Minister – with a new Chancellor calling the shots and the Bank of England supporting the pound – was forced to undergo a public humiliation which wouldn’t have looked out of place on Game of Thrones. 

Even away from politics, good news was hard to find in October. Figures for August showed that the economy had unexpectedly contracted by 0.3%, leading to fears of a recession. September saw inflation at 10.1% – back to a 40-year high – as the BBC reported that people ‘are delaying turning their heating on’. The International Monetary Fund added to the gloom, saying that it expected inflation in the UK to peak at 11.3% before the end of the year. 

Clearly the rising prices are impacting business, with City AM firstly reporting that company insolvencies in the second quarter hit their highest level since 2009, and a few days later suggesting that ’50,000 small businesses in London could collapse’. While that last headline might seem a shade alarmist, there is no doubt that the coming year will be a very challenging one for our clients who own and run SMEs. 

What about jobs in general and the nation’s high street? The month got off to a bad start with Tesco reporting first half profits sharply down on last year. The figure of £413m was 64% down on the first six months of 2021, as the supermarket chain warned that ‘shoppers are watching every penny’.

A day later, City AM was reporting that high street spending had ‘slumped’, with the rate of footfall increase post-Covid slowing sharply, with ‘shoppers cutting back on shopping sprees’. The counter-argument to that, of course, is that shoppers simply went online – but as we will see in the US section, Amazon also reported disappointing figures. 

There were two pinpoints of light at the end of the tunnel. The unemployment rate fell to 3.5%, the lowest figure recorded for 50 years. And we may finally be returning to the office, at least in London. Restaurant chain Itsu declared that the capital was ‘back in business’, with increasing numbers of customers being served from Monday to Friday. 

And what many of our clients have waited so long for might soon be here. ‘Savers rates finally on the move’ reported the BBC. It is, of course, the flipside of the recent higher mortgage rates, but it appears that there is finally some real competition emerging in the savings market. ‘Experts say banks and building societies are leapfrogging each other on best buy tables,’ said the story – music to the ears of many of our clients. 

It is impossible, though, to leave the UK section anywhere other than back with the new Prime Minister and Chancellor. For the time being, their appointment seems to have calmed the markets, with both the pound and the FTSE ultimately making gains in October. Sunak ‘not perfect but the right choice for now’ was how one commentator put it, and that appears to be the view of the markets. Although UK Government debt continues to rise, the cost of servicing it is, at least for now, coming down. 

The FTSE-100 index of leading shares was up by 3% to close the month at 7,095. The pound strengthened by a similar percentage against the dollar, and ended October trading at $1.1490. 


October began with the US committing a further $625m (£538m) in defence aid to Ukraine following a telephone conversation between Presidents Zelenskyy and Biden. This takes the total US spend to date to $16.8bn (£14.5bn) – a figure which has not gone down well with some of the country’s more right-wing commentators. 

The month’s first significant event in the conflict came a few days later when a huge blast destroyed sections of a bridge leading to Crimea – both strategically important and a symbol of Russia’s annexation of Crimea in 2014. 

Retaliatory strikes across Ukraine quickly followed and – still evidently not satisfied with progress – in mid-month, Putin sacked two of his senior military commanders and appointed General Sergey Surovikin to lead the next phase of the conflict. Surovikin is apparently known as ‘General Armageddon’, which may give some clue to future Russian tactics. 

Ukraine has huge, untapped gas supplies in the Dnipro-Donets basin, and held talks with American drillers about pumping this gas to Europe, reducing the region’s dependence on Russian gas – and presumably making Europe more willing to supply Ukraine with the weapons it now needs. 

October saw China order all its citizens to leave Ukraine. Whether this was in response to the escalation of Russia’s shelling following the attack on the bridge, or whether China knows of Putin’s further plans, is impossible to say. What we can say is that the war has now lasted for eight months, and there is no end – either military or diplomatic – in sight. 

The month ended with another twist to the downward spiral as Russia suspended its participation in the grain deal struck in the summer. This followed what it described as a ‘massive’ drone attack on its Black Sea fleet, and prompted the ominous Sunday Telegraph headline, ‘Food prices to surge after Putin chokes grain supply.’ 


While the debate about a windfall tax on energy firms rages on in the UK, the EU has made its mind up. 

The 27 member bloc has confirmed it will impose a windfall tax on energy companies’ profits, aiming to raise funds to provide relief for families and businesses across the continent. The measures include a levy on fossil fuel companies’ surplus profits made in 2022 or 2023, and another levy on excess revenues low-cost producers make from the rising electricity costs. 

At the same time, Sweden all but accepted that it will face power shortages this winter. It was hit by a dry and relatively windless summer, meaning less energy was generated from renewables: in addition the country’s nuclear power plants are not yet ready to supply consumers. 

The Swedish prosecution authority declared the area around the ruptured Nord Stream pipelines a ‘crime scene’, banning divers and vessels from being within 5.8 miles of the leaks. 

There were more twists in the energy tale in the middle of the month, when the biggest oil refinery in Europe, Shell’s Pernis in the Netherlands, suffered what was described as a ‘malfunction’. This came on top of the pressure on fuel supplies caused by a wave of strikes in France. 

In company news, Porsche overtook Volkswagen to become Europe’s most valuable car maker, with shares surging to €93 (£80) before stabilising at around €91 (£78), to give the company a valuation of €84bn (£72bn) and take it past Volkswagen. 

Long time readers of this Bulletin will remember the travails of Deutsche Bank. Mired in scandals and seemingly-endless losses it was long seen as the ‘sick man’ of the global banking sector, but a turnaround under Christian Sewing has just seen the bank record its ninth successive quarterly profit, making €1.12bn (£961m) in the three months to September, up from €194m (£166m) in the same period last year. 

Europe’s stock markets took their cue from Porsche and Deutsche Bank rather than continuing worries about energy, with both the German and French markets rising by 9% in the month. They closed October at 13,254 and 6,267 respectively. 


For much of this year, we have been reporting on Elon Musk’s on/off pursuit of the social media platform Twitter. The deal was finally concluded with the world’s richest man paying $44bn (£38bn) for the company, walking into the headquarters building carrying a sink and promptly cutting a swathe through the senior management team. 

Quite what Musk’s plans are for the company remain to be seen: there is talk that he wants to create a ‘super-app’ that will take care of every aspect of our lives, much like some of the apps in the Far East. You suspect we won’t have long to wait to find out…

Staying with Elon Musk, October was a good month for Tesla. A few days after the company announced that it would deliver its first trucks in December – Pepsi has apparently ordered 100 – came the news that it had sold 83,135 China-made vehicles in September. That was a new record, and up 8% on August, according to figures from the China Passenger Car Association. 

If October was a good month for Tesla, it was emphatically not a good month for some of the tech giants, who were badly hit by the slowdown in the economy and the consequent caution on the part of advertisers. Both Google and Microsoft reported slowing sales growth – Alphabet, the parent company of Google and YouTube reported sales up just 6% in the third quarter – while Facebook shares slumped to a six-year low. 

The chill wind also blew through Amazon: analysts were disappointed with the 3rd quarter figures, as revenue growth slowed to 27% from the 33% recorded in the second quarter. The company said it expected the challenges of inflation, rising fuel costs and weaker demand to persist ‘through the holiday quarter’. CEO Brian Olsavsky said the company ‘will be looking at our cost structure and areas where we can save money’. The net result of all this was a fall of nearly 20% in the company’s shares, wiping $202bn (£174bn) off the company’s value. 

In the wider US economy, jobs growth slowed to 263,000 new jobs in September – the lowest figure since April 2021 – as the fight against inflation continued. Analysts continue to expect further rises in US interest rates. 

We have mentioned above the EU’s decision to impose a windfall tax on energy companies. How they must wish they could get their hands on Exxon Mobil: the company – headquartered in Irving, Texas – is expected to unveil another quarter of huge profits in the coming week, powered by high natural gas prices. The company is currently on track for an expected $54.8bn (£47.2bn) profit this year – more than its cumulative earnings since 2018. 

October also saw the price of coal go above $200 (£172) a ton for the first time ever. We have written previously about China greatly expanding its coal production: you suspect that in the current climate plenty of countries will be following suit. 

On Wall Street, it was a similar picture to the markets in London, Frankfurt and Paris. The Dow Jones index was up by an impressive 14% to close the month at 32,733. The more broadly-based S&P500 index rose 8% to 3,872. 

Far East 

There were two major stories in this section of the Bulletin last month: confirmation that Xi Jinping is effectively ‘ruler for life’ in China, and the Hong Kong stock market. 

Let’s begin with what appears to be absolute power. October brought us the Communist Party Congress in China, an event held once every five years. Previously it has been the rule that a Chinese leader can only serve two five-year terms but, as we have reported in previous Bulletins, that rule has been removed. 

The Congress saw Xi Jinping handed a third term as President, effectively making him the most powerful Chinese leader since Mao. What was noticeable about the Congress – apart from Xi’s fierce defence of his ‘zero Covid’ policy – was that the Politburo Standing Committee, the ‘seven men who rule China’, now consists wholly of Xi loyalists. As several commentators pointed out, Xi prizes loyalty far more than ability. 

Widely believed to be ‘number two’ to Xi is Li Qiang, the Shanghai party chief. Earlier this year, there was speculation that Li’s career was doomed because of the two-month lockdown in Shanghai. But he is a close ally of Xi, showing him absolute loyalty, and is now likely to be China’s next Premier and, effectively, the man in charge of the Chinese economy. 

…And hence the concerns, especially in Hong Kong. The lockdown in Shanghai did huge damage to the Chinese economy but was deemed worth it – and was ruthlessly enforced – as part of the zero Covid policy. The fear now is that in his third term, Xi Jinping will put ideology first and economic growth a distant second. Bloomberg reported that Chinese workers are already experiencing the worst job market prospects on record as the economy continues to slow. 

Shares in tech companies like Alibaba and Ten Cent fell sharply on the confirmation of Xi’s third term, and the market in Hong Kong was especially badly hit: on the 20th of the month the market stood at 16,280 – a nine-year low. But as we will see below, the damage didn’t end there.

Away from China, the other big story was action by the Bank of Japan to support the yen. Speculation was rife on how much the BoJ had spent selling dollars and buying yen: the figure was eventually put at 2.8 trillion yen – equivalent to $19.7bn or £17bn. Did it work? At the time of writing this section of the Bulletin, the Yen was trading at 147 to the dollar – with 140 generally held to be a crucial support level. 

So we come to the region’s stock markets. At the beginning of this year, Hong Kong’s Hang Seng index was trading at 23,398. It closed September at 17,223 – and it closed October at 14,687, a fall of 15% for the month. For the year as a whole, the Hong Kong market is down by 37%. China’s Shanghai Composite Index also fell, albeit by a much more modest 4% to 2,893. In complete contrast, the markets in Japan and South Korea both enjoyed good months, rising by 6% to close at 27,587 and 2,294 respectively. 

Emerging Markets 

We have, as is now customary, covered the war in Ukraine in its own section above. It may, though, be appropriate to ask, ‘what’s going on in Russia?’ Rumours of a coup have swirled around all year and October brought the sudden death of another of Vladimir Putin’s long-time allies. Nikolay Petrunin, a multi-millionaire, close confidant of the President and dubbed the ‘Gazprom wonderkid’ died, reportedly from complications associated with Covid. The official line did little to quell speculation, with his death coming just five weeks after that of the head of Russia’s biggest privately-held oil producer. 

Rumours also continue to persist over Putin’s health and the inevitable question, ‘who might take over from him?’ One name that came to the fore in October was Sergei Kiriyenko, the so-called ‘Viceroy of the Donbas’ (everyone in Russia seems to have a nickname). A Kremlin insider and the man credited with the recent ‘successful’ referenda in the Donas region, Kiriyenko is apparently the man Putin wants as his successor – at least for this week. 

Everyone reading this Bulletin will know that the world’s population continues to increase, with the latest figures suggesting that the number of people on our planet has doubled since 1973. At that point, there were only six countries with a population of over 100m: today there are 15, with India expected to overtake China next year to become the world’s most populous country, with an estimated population of 1.43bn (compared to 1.425bn in China). India and China are followed on the list by Pakistan, Nigeria, Indonesia and the US. 

The month ended with a close-run election in Brazil, with former President Lula challenging current incumbent Jair Bolsonaro. Left-winger Lula beat Bolsonaro by five percentage points in the first round of voting, but the run-off was expected to be much tighter. In the event the 77-year-old Luna – who served two terms as president between 2003 and 2010 but was subsequently accused of corruption – prevailed, winning 50.89% of the vote. 

What of the region’s stock markets in October? Like most of the world’s stock markets they made gains in October. The Russian market led the way with a gain of 11% to end the month at 2,167. The Indian market was up by 6%, breaking through the 60,000 barrier to reach 60,747. In Brazil, the market rose by 5% to close October at 116,037. 

And finally…

And so we come to the ‘And finally…’ section of the Bulletin – a bastion of sanity compared to the recent goings-on in Westminster.

Sadly, bizarre stories were in short supply in October so we must content ourselves with discussing cheese – and the end of the world. 

Older clients will remember apocryphal stories of the European Union’s ‘wine lake’ – the overproduction of wine in the EU around 2005-7, with the surplus wine having to be turned into industrial alcohol. 

Quite what the equivalent for cheese is we’re not sure – mountain? Wedge? – but the USA is going to need to find a word for it. A report revealed that the country had approximately 1.5bn pounds of cheese in cold storage as of April 2022, worth an estimated $3.4bn (£2.9bn). 

The largest constituents of this surplus are processed American cheese (there has been a long-running overproduction of milk in the US), Swiss cheese and good old Cheddar. Where does the country store that much cheese – enough to make the Statue of Liberty out of cheese many times over? Much of it is, apparently, stored in a huge underground facility just outside Springfield, Missouri. 

Speaking of going underground, October brought news of Oppidum, a Swiss company which makes luxury underground bunkers in which the ultra, ultra-rich can ride out the coming apocalypse. The L’Heritage bunkers – designed by a French architect – can obviously be customised to an owner’s taste, and can include extra facilities such as an extra-large garage (presumably for Mad Max style vehicles), a private art gallery, meeting lounges, indoor gardens and a spa with a private pool. 

Security is, of course, paramount, with the fortified blast doors controlled by a system that scans a resident’s face, iris, palm and fingerprints. The bunkers are available in the UK, EU and United Arab Emirates. Plus, inevitably, the USA. 

So it’s good to know that whatever happens, Elon Musk will be safe. There may be an apocalypse, ladies and gentlemen, but don’t worry. You’ll still be able to tweet about it…


What are gilts?

Wednesday, October 19th, 2022

The recent Mini Budget, a £45 billion tax cutting package, paid for by increased public borrowing, led to panic among many investors and a run on Britain’s pension funds. As a result, the Bank of England was forced to step in to stop a collapse by pledging to buy around £65 billion of long-dated gilts.

But what exactly are gilts and why do they matter? For many, the financial jargon that has – justifiably – dominated the headlines in recent weeks is confusing and incomprehensible, so we’ll try to answer these questions in straightforward terms.

UK gilts are fixed-interest securities issued by the British government when it wants to raise funds. They are considered low-risk investments, as the government isn’t likely to go bankrupt, which means they’re likely to be able to pay back the loan in full, plus the interest. 

You can either invest in conventional gilts, with a fixed interest rate or in index-linked gilts, which are linked to the Retail Price Index, meaning their values will rise with inflation. 

So investing in a gilt, or a government bond, is similar to making a loan. But instead of lending to an individual, you’re lending to a business or government.

Investors can then receive a regular income in the form of interest over a set period of time, or this income can be reinvested.

When the gilt reaches maturity, the initial nominal investment is then repaid, along with the proceeds of any reinvested amounts.

How do gilts work?

Each gilt is made up of an issuer, coupon and redemption date. For example:

Treasury stock 4% 2023

The issuer is the UK Government Treasury and the coupon is set at 4% interest on a sum of money (typically £100). The redemption date is set at 2023. 

So if the government wanted to raise, let’s say, £1 million, it would release one hundred thousand gilts at the value of £100 each. If you were to purchase £1,000 worth of these Treasury gilts, you would receive £40 every year until the loan was repaid in 2023.

You’ll usually find that the further away the redemption date, the higher the interest you will receive. 

If you have any questions about the various investment options that are open to you, feel free to get in touch with us, and we’ll be happy to help.


Autumn Mini Budget Overview 2022

Wednesday, September 28th, 2022

So what was it? A ‘fiscal event’? A Mini Budget? Or a full-blown Budget from a new Chancellor determined to take the UK in a very different direction from previous occupants of 11 Downing Street? As we will see in more detail below, reactions to the measures introduced by Kwasi Kwarteng on Friday September 23rd were sharply divided. 

Saturday morning’s papers, though, were quick to deliver their verdict. ‘At last! A True Tory Budget’ was the Mail’s headline. ‘We’ve got the courage to bet big on Britain,’ said the Express. The gambling theme was repeated in other papers. ‘Kwarteng gambles on biggest tax cuts in half a century’ was the Telegraph headline, while the Times went with ‘Truss’s great tax gamble’.

Irrespective of whether it was a ‘fiscal event’ or a full Budget, there was a lot to digest. We’ve detailed all the measures below, but first, let’s look at the background to Kwasi Kwarteng’s radical measures. 

The political background 

In July 2019, Boris Johnson replaced Theresa May as leader of the Conservative Party and Prime Minister. Liz Truss, MP for South West Norfolk and a supporter of Johnson in his leadership campaign, was appointed International Trade Secretary. Lower down the ministerial ladder, Kwasi Kwarteng, the MP for Spelthorne, was made a Minister of State at the Department for Business, Energy and Industrial Strategy. 

Five months later, Boris Johnson led the Conservatives to an 80-seat majority in the General Election on a promise to ‘Get Brexit Done’. His position appeared to be impregnable, but as we now know, he was forced to resign in the summer of 2022. The subsequent battle to replace him eventually came down to a straight fight between Liz Truss and former Chancellor – and early favourite – Rishi Sunak. Eventually, Truss won out, after endearing herself to Conservative members with a series of commitments to cut taxes. 

She became Prime Minister on September 6th and, with the Queen’s death just two days later. Many people had expected Sunak’s successor, Nadhim Zahawi, to continue as Chancellor, but instead, Liz Truss opted for Kwasi Kwarteng – widely regarded as being on the right of the Conservative Party and a staunch advocate of tax cuts. 

The death of the Queen, the national period of mourning and the approaching party conference season meant that the timetable for the fiscal event was shortened. Budget speeches are normally delivered on Wednesday lunchtime, after Prime Minister’s Questions. This time, Kwarteng delivered his package of measures on Friday morning, ahead of the Labour Party Conference in the last week of September and the Conservative Conference the following week. 

The economic background 

‘Neither a borrower nor a lender be.’ Many of you will know that famous quotation from Hamlet, but over the last two years, the UK Government has had little choice other than to be a borrower – and to be a borrower on an almost unprecedented scale.

A document published by the House of Commons library revealed that borrowing for 2020/21 was £167 billion higher than had been planned before the pandemic. Total spending to deal with coronavirus was put in the range of £310 billion to £410 billion. 

That document, however, was optimistic about the cost of servicing the extra borrowing. Published in March 2022, it said: “The cost of borrowing is currently very low [but the public finances are] vulnerable to an increase in these costs.”

This, of course, is exactly what has happened. The rising cost of energy and the global supply chain crisis has caused inflation on a scale not seen for years: in order to try to keep a lid on inflation, central banks have increased interest rates – which, in turn, have increased the cost of servicing the UK’s debt. 

And there was more debt to come. Within days of becoming PM, Liz Truss had committed to borrowing ‘up to £150 billion’ in order to cap a typical household’s energy bill at £2,500 a year until 2024. “Extraordinary times call for extraordinary measures,” she said. 

Meanwhile, the cost of servicing the equally extraordinary borrowing was rising. On September 22nd, the Bank of England raised interest rates by 0.5% to 2.25% and conceded that the ‘UK may already be in recession’. 

Rising rates meant that the Government borrowed £11.8 billion in August, almost twice as much as the Treasury forecasters had expected, as high inflation pushed interest payments to an August record. The inflation rate for August – at 9.9% – was down very slightly on July’s 10.1%, but there are plenty of forecasters ready to suggest that it could go much higher next year. Despite the action on energy bills, UK consumer confidence slipped into negative territory for the first time since 2020. 

The tax cuts – including the changes to stamp duty, cuts in income tax and the reversal of the rise in National Insurance – had been well trailed in advance. Supporters of the Chancellor were looking forward to the speech, while critics were already sharpening their knives, with the Institute for Fiscal Studies warning that “the tax cuts gamble will make [the UK’s] debt unsustainable”.

The speech 

Opening remarks

Kwasi Kwarteng began by acknowledging that the cost of energy is the issue that is “worrying British people the most”, and described the recent support for households and businesses as “one of the most significant interventions the British state has ever made”.

However, he stressed that high energy costs are not the only challenge confronting the UK, as growth is “not as high as it should be”. Mr Kwarteng therefore pledged “a new approach for a new era”, with lower taxes at the heart of his strategy.

Personal taxation and allowances


A cut in the basic rate of income tax, from 20% to 19%.


April 2023.


The planned reduction in the basic rate of income tax to 19p has been brought forward by one year. The Government says this means more than 31 million people will get £170 more per year on average, and works out to a tax cut of over £5 billion a year. Mr Kwarteng says this also makes the UK’s income tax system one of the most competitive in the world.

There will be a one-year transitional period for Relief at Source (RAS) pension schemes to allow people to continue to claim tax relief at 20%. That means that even though the income tax rate will be 19%, personal pension contributions will get 20% tax relief at source.



Top rate of income tax scrapped and single higher rate to be introduced.


April 2023.


The highest rate of income tax currently stands at 45% and is paid by anyone who earns more than £150,000 a year. But from April 2023, a single higher rate of income tax of 40% will be introduced, a move that Mr Kwarteng believes will simplify the tax system, make Britain more competitive, reward work and incentivise growth. 



Increase in dividend tax rates to be reversed.


April 2023.


The 1.25% increase in dividend tax rates is to be reversed, which will benefit 2.6 million dividend taxpayers with average savings of £345 in 2023-24. Additional rate taxpayers will also benefit from the scrapping of the additional rate of dividend tax. The Government believes the move will support entrepreneurs and investors, which can in turn drive economic growth.



Stamp duty cut.


September 23rd 2022.


The threshold at which Stamp Duty Land Tax (SDLT) must be paid in England and Northern Ireland has been doubled to £250,000 for all home purchases. 

The threshold at which first-time buyers are liable to pay SDLT, meanwhile, has increased from £300,000 to £425,000, and the value of the property on which first-time buyers can claim relief goes up from £500,000 to £625,000.

Mr Kwarteng says the measures take 200,000 people “out of paying stamp duty altogether” and will be a permanent change to the SDLT system.

Business investment and taxation


Corporation tax increase to be cancelled.




The Government had planned to increase corporation tax from 19% to 25% in April 2023, but this will no longer go ahead.

Mr Kwarteng says this will give the UK the lowest rate of corporation tax in the G20 and plough almost £19 billion a year back into the economy. This, he maintains, gives businesses more money to “reinvest, create jobs, increase wages or pay the dividends that support our pensions”.



Removing caps on bankers’ bonuses.




The cap on bonuses bankers are allowed to receive on top of their salaries, which was introduced by the European Union in 2014 after the global financial crisis, has been scrapped.

Under the previous system, bankers’ bonuses could not be higher than twice their annual salary without the agreement of shareholders. However, the Government believes that payment in bonuses “aligns the incentives of individuals with those of the bank”, which can in turn support economic growth.

Although the move is likely to prove controversial, Mr Kwarteng has insisted that the bonus cap “never capped total remuneration”, and instead pushed up the basic salaries of bankers or drove activity outside Europe.

In his statement, he argued that a strong UK economy depends on a strong financial services sector, with global banks creating jobs, paying taxes and investing “here in London, not Paris, not Frankfurt, not New York”.



New investment zones.


No dates confirmed.


The Government will liberalise planning rules in designated sites, releasing land and accelerating development. This will be accompanied by tax cuts, with enhanced tax relief for structures and buildings, 100% first year allowance on qualifying investments in plant and machinery, and no stamp duty payments on purchases of land and buildings for commercial or new residential development. 

Newly occupied business premises will be exempt from business rates, and if a company residing in the designated site hires a new employee to work in the tax site for at least 60% of the time, they will pay no National Insurance on the first £50,270 that they earn.



Simplifying IR35 rules.


April 2023.


Workers who provide services via an intermediary will be responsible for determining their employment status and paying the appropriate amount of National Insurance and tax.

The Government believes reforms to off-payroll working introduced in 2017 and 2021 have added “unnecessary complexity and cost for many businesses”. As a result, it hopes this latest change will “free up time and money for businesses that engage contractors that could be put towards other priorities.” 



Energy Bill Relief Scheme.


Immediately (announced earlier this month).


The Government will provide businesses and non-domestic energy users, including schools, hospitals and charities, with a discount on energy prices for six months.


National insurance


1.25% rise in National Insurance to be reversed.


November 6th 2022.


The Government is reducing Class 1 and Class 4 National Insurance contributions (NICs) by 1.25 percentage points from November and cancelling the introduction of the Health and Social Care Levy. This was set to be introduced in April 2023, and proved to be one of the most controversial policy announcements of Boris Johnson’s premiership, as the Government had pledged not to increase NI in its election manifesto. 

However, Liz Truss spent much of the recent leadership contest pledging to reverse this policy. The Government says the move enables almost 28 million people to keep an extra £330, on average, of their money next year.


The cost of living crisis


Energy Price Guarantee (EPG).


Immediately (announced earlier this month).


The Government has pledged to limit the unit price that consumers pay for gas and electricity, which means typical annual household bills will be £2,500 for the next two years. This is on top of the previously announced plan to give all households £400 towards their bills this winter.

As part of the Energy Price Guarantee, the Government will also cover environmental and social costs, as well as green levies, currently included in domestic energy bills, for two years.

Other measures

Alcohol duty


Planned duty increase for beer, cider, wine and spirits scrapped.


February 1st 2023.


Duty rates for beer, cider, wine and spirits will be frozen, which the Government believes will support businesses and help consumers with the cost of living.

An 18-month transitional measure for wine duty has also been announced, while draught relief will be extended to cover smaller kegs of 20 litres and above, which the Government says will help smaller breweries.


VAT-free Shopping


VAT-free shopping for overseas visitors.


No date confirmed.


A digital VAT-free shopping scheme, designed to boost the high street and create jobs in retail and tourism, will be introduced. Under the scheme, overseas visitors to the UK will be able to purchase items VAT-free. Although no date has yet been confirmed, Mr Kwarteng said he wants to see this put in place as soon as possible.


Universal Credit


Tighter rules on Universal Credit.


January 2023.


Universal Credit claimants who earn less than the equivalent of 15 hours a week at the National Living Wage will have to regularly meet with their work coach and actively take steps to increase their earnings, or risk having their benefits cut. The Government believes this will bring a further 120,000 people into the more intensive work search regime.


Industrial Action


Trade unions will have to put pay offers to members.


No date confirmed.


The Government will legislate to require trade unions to put pay offers to a member vote, so that strikes can only be called once negotiations have genuinely broken down. Legislation to ensure Minimum Service Levels can be put in place for transport services, so that strike action does not prevent people getting to and from work, will also be introduced. 


Infrastructure planning legislation 


New laws to simplify infrastructure planning rules.


No date confirmed.


Legislation to simplify the planning system for major infrastructure projects is to be put forward, as the Government believes the existing process is “too slow and fragmented”.

Mr Kwarteng said the time it takes to get consent for “nationally significant projects is getting slower, not quicker, while our international competitors forge ahead”.

He therefore wants to streamline assessments, appraisals, consultations and regulations, and review the Government’s business case process to speed up decision-making.

A list of infrastructure projects to be prioritised for acceleration has been published, covering sectors such as telecoms, energy and transport.


Reforms to the pension charge cap  


Pension Charge Cap no longer to apply to well-designed performance fees.


No date confirmed.


Draft regulations to remove well-designed performance fees from the occupational defined contribution pension charge cap will be brought forward.

The Government believes this will unlock pension fund investment into UK assets and innovative, high growth businesses, and ensure savers benefit from higher potential investment returns.


Reaction to the speech 

Reaction to the Chancellor’s speech was – as we have already seen – sharply divided. Many right-wing commentators could not contain their excitement, while those on the left derided it as a ‘Budget without numbers’ and one that would benefit ‘only the rich’. 

Writing in the Telegraph, Allister Heath described Kwarteng’s statement as “the best Budget I have ever heard a Chancellor deliver, by a massive margin”. He added that “hardcore, unapologetic liberal Toryism is back”, before praising the Chancellor for his commitment to “a flatter and simpler tax system”. 

Across the political divide, the Resolution Foundation accused Kwarteng of ‘blowing the Budget’ with half of his planned tax cuts going to ‘the richest 5%’. The £45 billion package, the Foundation said, would ‘raise interest rates and see an additional £411 billion of borrowing over five years’.

There was plenty of reaction from other think tanks and lobbying groups too. Unsurprisingly, the Taxpayers’ Alliance called the speech ‘the most tax-friendly Budget in recent memory’. Adding a cautionary note on excessive spending, Chief Executive John O’Connell wrote: “Taxpayers will be delighted with a Budget that eases the burden on their bottom lines and promises a growth game changer.” 

The Adam Smith Institute was similarly enthusiastic, saying that the Mini Budget was ‘the first step to getting the British economy back on track’. Head of Research Daniel Pryor said: “The planned increase in Corporation Tax would have hammered business, choked off investment and reduced workers’ wages. It’s also encouraging to see the Chancellor understands the importance of capital allowances.” 

Meanwhile, Director of the Institute for Economic Affairs Mark Littlewood commented: “This isn’t a trickle-down Budget, it’s a boost-up Budget. It’s refreshing to hear a Chancellor talk passionately about the importance of economic growth, rather than rattling off a string of state spending pledges.”

Not everyone, though, was reaching for the champagne. The Resolution Foundation added the note that growth in the short term ‘is in Putin’s hands rather than ours’.

Director of the Institute for Fiscal Studies Paul Johnson welcomed the cuts to stamp duty, but drew worrying parallels with Anthony Barber’s 1972 ‘dash for growth’ Budget, which ‘ended in disaster’ and was now ‘acknowledged as the worst of modern times’. 

The left-wing Momentum organisation’s take on the announcements was even simpler, and used just six words: “The Tories have declared class war.” 

What about the markets? There are, of course, many other factors acting on the FTSE-100 index of leading shares and the pound, but the pound went into free fall after the Chancellor’s statement, and by the following Monday morning, it had fallen to a record low against the dollar.


Kwasi Kwarteng didn’t waste time in his first major speech as Chancellor. He spoke for just 25 minutes, starting by dealing with the cost of energy and then proceeded to rattle off a string of tax cuts. 

“We won’t apologise,” he said in conclusion, as he dismissed the ‘tax and spend’ approach of previous governments, both Conservative and Labour. “Our entire focus is on making the UK more competitive in a fiercely competitive global economy.” 

Depending on your political standpoint, you may regard the statement as “the best Conservative Budget since 1986”, as Nigel Farage described it, or perhaps you feel nervous about the Chancellor’s decision to ‘gamble on the biggest tax cuts in half a century’.

What is certain is that the new PM and her Chancellor will not be changing course. As Mr Kwarteng sat down, your immediate reaction might have been to wonder what further tax cuts he would introduce in his March Budget. According to the Sunday papers, we may not have to wait even that long. ‘Truss plans to cut taxes again in the New Year’ was the Sunday Telegraph headline, and the Express was rather more forthright with ‘Chancellor: You ain’t seen nothing yet’.

Former Chancellor George Osborne always made the same point in his Budget speeches: whatever measures he took, the UK could easily be blown off course by factors beyond his control. Right now, that “fiercely competitive global economy” includes the conflict in Ukraine, increasing tensions between the US and China, energy prices that are far higher than they were a year ago, increasing base rates to counter inflation and seemingly endless supply chain problems. 

So the world – and the global economy – may look very different by the time Kwasi Kwarteng rises to present his March Budget. Rest assured though, that whatever happens in the next six months, we will – as always – keep you fully up to date with all the news, and how it impacts your savings, investments and long-term financial planning.

September Market Commentary

Wednesday, September 7th, 2022

August started with US Speaker Nancy Pelosi visiting Taiwan. We comment on China’s reaction below and we also describe the environmental and economic challenges facing the country.

With domestic crises brewing at home, some commentators have noted the convenience of an external crisis for the CCP (Chinese Communist Party). “The position of the Chinese government and people on Taiwan is consistent,” President Xi Jinping said in a phone call to Joe Biden. “Those who play with fire will perish by it.” Taiwan claimed that China’s military exercises were simulating a ‘full attack’ on the island and China/US relations do not appear likely to improve any time soon. “Hope is not a strategy,” one commentator warned.

The headlines in August continued to be dominated by possible energy shortages and inflation. ‘Winter is coming’ as they frequently warned on Game of Thrones and there were certainly plenty of grim predictions. Fortunately the month ended with some light (possibly) at the end of the tunnel, with gas prices falling as Germany appeared to be on course to meet its storage targets.

In the UK August was the last full month of Boris Johnson’s Premiership, now replaced by Liz Truss who beat Rishi Sunak in the final ballot of members.

The month ended with a crisis of ‘unimaginable proportions’ as the monsoon rains and melting glaciers brought widespread flooding to Pakistan. At the time of writing a third of the country Pakistan which is bigger than both France and Spain was estimated to be under water.

As always, let’s look at all the news in more detail…


Boris Johnson entered 10 Downing Street in July 2019 and in December of that year secured an 80 seat Commons majority on a promise to ‘get Brexit done’. No-one then would have forecast a global pandemic or Johnson leaving Downing Street just over three years later and Liz Truss arrives in No10 to face a raft of problems.

At its meeting on August 3rd, the Bank of England’s Monetary Policy Committee voted by 8-1 to raise interest rates by 0.5% to 1.75%, the biggest increase for 27 years. Worryingly it warned that the UK was likely to fall into recession this year and that inflation was now “set to go above 13%”. Governor Andrew Bailey acknowledged the impact this would have but said that if the Bank didn’t raise rates inflation would be “even worse.” The inflation figure for July was 10.1%, up from 9.4% in June and the highest rate for some 40 years, driving what the BBC described as “the fastest fall in real pay on record”. Despite this, most analysts agreed that the Bank of England will raise rates again, with some forecasters expecting inflation to hit 18% next year. With sanctions on Russia pushing trade with the country to a new low, figures showed that the UK’s trade deficit for the second quarter was £27.9bn; a new record.

The Office for National Statistics confirmed that the economy had contracted by 0.1% in Q2. Unsurprisingly UK consumer confidence dropped to a new low, so there’ll be plenty of problems for the new PM to address. Not least of these will be those facing the UK’s small businesses, which are reported to be ‘scrapping hiring plans’ in the face of economic uncertainty. To compound the problem many companies, especially in the hospitality sector, are saying they are likely to go out of business if the planned rises in energy costs go ahead. The month ended with Ofgem announcing an 80% rise in the energy cap.

Was there any light in the gloom? UK car production grew for the third consecutive month. The heatwave boosted UK retail and helped it to recover some of the ground lost earlier in the year and store closures are now running at their lowest level for seven years.

In the circumstances the UK’s FTSE-100 index of leading shares didn’t fare too badly. Like most of the markets we cover in the Bulletin worries about inflation and energy pushed it lower, but it was only down by 2%, closing the month at 7,284. The pound was firmly in ‘good news for exporters, bad news for holidaymakers’ territory, falling 5% against the dollar to end August trading at $1.1610.


We reported last month on the deal struck with Russia to allow grain ships to leave port, and the month started with the first ship leaving the southern port of Odesa. A week later four more ships carrying grain and sunflower oil left Ukrainian ports through the UN-brokered safe maritime corridor. The departures  from Odesa and Chornomorsk gave rise to hopes of export stability, with millions in countries that are dependent on Ukraine’s exports now facing famine conditions. Whether the deal will hold is anybody’s guess.

August brought the long-expected fightback from Ukraine, with explosions hitting Sevastopol in the Crimea and Ukraine beginning its push to take the area around Kherson, one of the first cities to fall to Russia. President Zelensky warned that the war was now entering a “nastier” phase and, as heavy fighting continued around Kherson, defence analyst Michael Clarke commented that the current phase of the war was “make or break for Ukraine’s credibility as an ally worth military backing from the West. Ukraine has to show it can do better than just lose the war slowly. This [the attack on Kherson] is a NATO-style offensive, so it is a clash of military thinking, as well as a clash of arms”. Against this background Boris Johnson visited Ukraine again for the last time as Prime Minister and the UK and Ukraine announced the start of talks over a digital trade agreement.


August was another month in Europe when the headlines were made by energy supplies or the potential lack of them. It got off to a rather morbid start with Svend-Joerk Sobolewski, the Chairman of Germany’s Cremation Consortium talking of an unprecedented energy crunch in the sector and warning that, “You can’t switch off death”. You suspect that Vladimir Putin may simply have said, “Watch me” and there were similar grim warnings all around Europe. The Swiss police chief openly discussed social unrest from winter fuel shortages. In Poland homeowners were queuing for coal in the middle of August.

If the shortages are as bad as feared the damage to Europe’s economies will be significant. By the end of the 2nd quarter, Germany was only reliant on Russian imports for about a quarter of its gas needs but that quarter is what powers the industry of the EU’s largest economy.

There was some respite at the end of the month, with City AM reporting that gas prices had ‘fallen sharply’ amid reports that Germany was on course to meet its gas storage targets for October but Russia has since shutdown the flow through the Nord Stream 1 pipeline into northern Germany indefinitely. 

There were problems of a different kind in Norway, where the country’s sovereign wealth fund (the state-owned investment fund built up thanks to the country’s oil surpluses) made a record loss of £144bn in the first half of the year. The fund is valued at over a trillion pounds and managed a negative return of 14.4% from January to June, with its technology holdings falling by 28%.

It was a rather more successful period for the French taxman who, using artificial intelligence developed by Google, raised an extra €10m (£8.56m) in revenue by spotting swimming pools which the owners had ‘forgotten’ to declare, thereby avoiding higher property taxes. Having been tested in nine French regions, the AI is unsurprisingly going to be rolled out across the whole country.

So were Europe’s leading stock markets as happy as a French tax collector in August or as gloomy as a German undertaker? Sadly it was the latter. With Germany’s DAX index down 5% to end the month at 12,835. The French market was down by the same percentage, closing at 6,125.


We often start the US section of the Bulletin with a report on the previous month’s jobs figure – a longstanding bellwether of the US economy. In July the US added 528,000 jobs, with the unemployment rate falling from 3.6% to 3.5%.

The report from the Labor Department was far stronger than had been expected, with recent data showing the economy continuing to shrink. The consensus forecast had been 250,000 causing some right-wing commentators to question whether the The Biden Administration was ‘massaging’ the figures ahead of the mid-term elections.

There was certainly some gloomy news around. Electric vehicle start-up Rivian laid off 6% of its 14,000 strong workforce. Figures for June showed the US housing market suffering its biggest monthly decline since the 1970s, and the largest single-month increase in homes listed for sale for 12 years. One estimate suggests that 1 in 6 US households are in arrears with their energy bills.

The month had begun with US Speaker Nancy Pelosi’s visit to Taiwan much to the annoyance of the authorities in Beijing who described it as “malicious provocation”. Pelosi offered her “unwavering commitment” to Taiwan’s democracy and by the middle of the month the US and Taiwan had announced formal trade negotiations. One aspect of Pelosi’s trip which went largely unreported was her meeting with the chairman of the Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chip maker and a company on which the US is heavily dependent. In a perfect world the US would like TSMC to establish a manufacturing base in the US – and stop making advanced chips for Chinese companies.

The month ended with reports that The Biden Administration was ready to ignore China’s live-fire exercises following Pelosi’s visit and ramp up arms sales to Taiwan. It will, apparently, ask Congress to approve an estimated $1.1bn (£940m) arms deal that will include 60 anti-ship missiles and 100 air-to-air missiles.

There was some good news for the US on inflation, which cooled more quickly than most experts had predicted thanks to the rise in interest rates. July’s figure was 8.5%, down from 9.1% in the previous month. That said, grocery inflation hit its highest level since 1979, while the ‘food at home’ index which covers cereals and bakery products was up 13.1% from July 2021.

We have commented below on the drought affecting China, and the US was similarly hit. Two-thirds of the country is now estimated to be affected by the drought, as water levels drop to unprecedented lows in the country’s lakes and reservoirs. California is one of the states affected, and its farmers have been forced to abandon tomato fields. The state accounts for 25% of the world’s ketchup production – meaning that the price of your tomato sauce could soon skyrocket.

Definitely not skyrocketing during August was Wall Street. Both the US indices we cover in the bulletin were down by 4%, with the Dow Jones ending August at 31,510 and the more broadly-based S&P 500 closing at 3,955.

Far East

As we have just mentioned, the month started with Nancy Pelosi’s visit to Taiwan and predictable anger from Chinese leaders but, in truth, the Chinese authorities had far more than just Nancy Pelosi to worry about in August.

We have detailed before the problems facing the Chinese property sector in general and Evergrande in particular and August had no sooner started than Evergrande was a billion dollars worse off. The company announced that one of its subsidiaries had been ordered to pay 7.3bn yuan ($1.08bn £930m) for failing to meet its debt obligations. This came two days after the company had outlined plans to restructure its debts; roundly criticised by many commentators for a lack of clarity.

Bloomberg reported that China’s top 100 developers saw new home sales fall almost 40% in July, so the outlook for the property sector is not going to improve any time soon. The malaise wasn’t, though, confined to the property sector. A string of new figures released in the middle of the month showed China’s economy continuing to struggle with the effects of Beijing’s ‘zero-Covid’ policy. Figures for factory output, business investment, consumer spending and youth employment were all disappointing, prompting China’s central bank to launch a 0.1% cut in interest rates to support the economy.

The problems look set to continue with China badly hit by drought in August. Combined with a heatwave, water levels have dropped significantly, forcing Toyota and Contemporary Amperex Technology, the world’s largest battery maker, to close their factories in Sichuan province. With a population of 80m Sichuan is a major manufacturing hub but is heavily reliant on hydropower.

To put some numbers on China’s water crisis, the country uses 10bn barrels of water a day which is roughly 700 times its daily oil consumption but decades of economic and population growth have pushed northern China’s water system to unsustainable levels. According to one report, at the end of 2020 per-capita water supply around the North China Plain was 50% below the UN’s definition of ‘acute water scarcity’. China has clearly acknowledged the problem for some time: in 2003 it launched a ‘South the North’ water transfer project, intended to use water from the Yangtze to replenish the north of the country. Officials in Sichuan have now deployed two giant ‘cloud-seeding’ drones in a bid to stimulate rainfall.

As you might expect with all the problems, China’s Shanghai Composite Index fell back in August, dropping 2% to end the month at 3,202. The Hong Kong index was down by 1% to 19,954 but the markets in Japan and South Korea went in the opposite direction. Both markets ended the month 1% higher, at 28,092 and 2,472 respectively.

Emerging Markets

As regular readers know, the Bulletin is written from the notes we compile through the relevant month. Since Russia invaded Ukraine we have far more notes in this section of the Bulletin, an indication, perhaps, of the increasing role on the world stage of countries like India.

Let’s start there, with news of a record trade deficit. India’s trade deficit for July was $31bn (£26.5bn) as high import prices – driven by global inflation – met falling demand for Indian exports as major economies in the West slowed. We have commented above on the impact of heatwaves and drought, and India could be particularly badly hit. The country is the world’s biggest exporter of rice and the prolonged drought has seen planting areas for the crop decrease by 13%.

Russia is clearly finding the money to continue the war in Ukraine but sanctions are hitting the country’s GDP, with one study quoted in City AM suggesting that the Russian economy was 4% smaller than a year ago. A new report from the Kyiv School of Economics predicted that the Russian economy will shrink by 9.5% for this year as a whole with up to 4m Russians set to lose their jobs. Ukrainian studies on the Russian economy should be taken with a pinch of salt and we should wait to see what the winter will bring.

With Belgium’s Energy Minister warning that Europe faces ‘five or ten awful winters’ without a cap on natural gas prices, Hungary decided to blink first with energy group MOL paying the necessary transit fees to re-start flows of Russian oil. Russia has, apparently, enjoyed a 38% boost to its energy earnings this year, with higher gas and oil prices pushing earnings to $337.5bn (£288bn).

Oil giant Saudi Aramco took one look at Russia’s earnings and simply said “hold my beer” as it reported profits of $48.4bn (£41.4bn) for the second quarter of 2022, a 90% year-on-year increase and, according to Bloomberg, the biggest quarterly profit for any company.

Despite the continuing war in Ukraine, droughts and inflation, August was a good month for the three emerging markets we cover in the Bulletin. the Indian stock market rose 3% to 59,537: Brazil’s market was up 6% to 109,523. And despite the comments about the Russian economy shrinking, the Moscow stock market was up 8% in August to close at 2,400.

And finally…

August, of course, was traditionally known as the ‘silly season.’ With politicians taking their summer break, journalists used to struggle to fill their column inches, hence the appearance of stories that normally wouldn’t come anywhere near the front pages.

For the ‘And finally…’ section of the Bulletin it is, of course, the silly season all year round. August 2022 wasn’t a vintage month, but it certainly held its own. In 2013, in the early stages of Bitcoin’s development, Newport IT engineer James Howells ‘mined’ 8,000 Bitcoins. They were stored on the hard drive of his computer. When Mr Howells upgraded his computer he forgot the Bitcoin and threw the old hard drive away. Fast forward nine years and the hard drive is resting in a Newport landfill and the Bitcoin are now worth £150m. Mr Howells is pleading with the local council to be allowed to dig up the landfill, saying he’ll give 10% of the proceeds to turn Newport into a cryptocurrency ‘hub.’ Sadly the council say excavating the landfill would pose an unacceptable ecological risk.

No such hi-tech nonsense for an Italian man who decided on a more traditional route to riches, digging a tunnel to burrow into a bank near the Vatican. Sadly the tunnel collapsed, and firefighters spent eight hours digging him out. The unnamed gentleman is now recovering in hospital with the local carabinieri waiting patiently…

Inevitably inflation has featured prominently in this month’s Bulletin and even this section can’t escape it. A store in the US beset by rising prices and even-faster-rising crime decided to lock up one product in plastic theft-prevention cases. Shoppers in New York said they had ‘never seen anything like it’ as they handed over their $3.99 (£3.40) in return for a tin of Spam.

Sadly, many people’s traditional method of consolation, chocolate, has also been hit by inflation. It is, of course, a sign of getting older that all chocolate bars seem to be half the size they were when you were a child. Now the Christmas tub of Quality Street has gone the same way, with Nestle reducing the size of the tubs from 650g to 600g. Cartons are also down in size from 240g to 220g meaning there’s even less chance of finding a green triangle…