News in Review

“Strong policy support has fuelled a vigorous but uneven recovery”

With the summer holiday season drawing to a close, travel stocks were impacted last week, following the latest announcement from the Transport Secretary. Although several additions were made to the green list, some countries moved to the red list and popular holiday spots such as Spain, Greece, France and Italy remain on the amber list, a disappointment for many travellers and travel firms alike.

On Friday, global investors were heavily focused on Jerome Powell’s Jackson Hole keynote speech. During the much-anticipated symposium of central bankers, the Federal Reserve Chairman said the US Central Bank could begin to withdraw stimulus later this year, but the evolving impact of the Delta variant will be closely monitored. Despite a recent spike in inflation, he said the bank was in no rush to raise interest rates. He commented, “Strong policy support has fuelled a vigorous but uneven recovery… We have said that we would continue our asset purchases at the current pace until we see substantial further progress toward our maximum employment and price stability goals.”

European stock markets bounced on Friday and US stocks hit record highs on Monday as the Fed’s cautious approach gave investors some reassurance that the central bank’s efforts to shore up the economy will be withdrawn gradually. US stocks slipped from record highs on Tuesday as investors concerns intensified about the surge in Delta variant cases.

UK business confidence has risen to its highest point in over four years according to the Lloyds Bank Business Barometer, which suggests growing optimism is being fuelled by expectations of stronger growth in the coming year and improvements in trading prospects.

Contactless limit on the rise

From 15 October, it has been confirmed that the contactless card limit is to rise from £45 to £100, an initiative first detailed in the Spring Budget in March. With almost two-thirds of all debit card transactions currently being made via contactless technology, regulators have said that businesses can decide whether to accept the higher limit or not. Chancellor Rishi Sunak commented, “Increasing the contactless limit will make it easier than ever to pay safely and securely. As people get back to the high street, millions of payments will be made simpler, providing a welcome boost for retailers and shoppers.” Concerns have been raised regarding the risk of fraud as the limit increases further.

July car production falls to lowest level in 65 years

In July, British car manufacturing output fell by 37.6%, the first fall since February and the worst July performance since 1956. The latest figures released by the Society of Motor Manufacturers and Traders (SMMT) emphasise how production volumes have been severely disrupted by global semiconductor shortages and staff absences caused by the ‘pingdemic.’ In July, production for the UK market declined by 38.7% while manufacturing for export also fell, down 37.4%.

Demand for alternatively fuelled models is picking up, with over a quarter (26%) of all cars made in July being alternatively fuelled, the highest share on record.

Mike Hawes, SMMT Chief Executive commented, “These figures lay bare the extremely tough conditions UK car manufacturers continue to face… The UK automotive industry is doing what it can to keep production lines going, testament to the adaptability of its workforce and manufacturing processes, but government can help by continuing the supportive COVID measures currently in place and boosting our competitiveness with a reduction in energy levies and business rates for a sector that is strategically important in delivering net zero.”

UK’s first green gilt set to mature in 2033

At least £15bn of green gilts are set to be issued in the current financial year, the proceeds of which will go towards funding environmental projects. With COP 26 on the horizon, the gilts form part of the Chancellor’s drive to assist the UK finance sector to meet its net zero ambitions. It was announced last week by the Debt Management Office, that the UK’s inaugural green gilts, set to be launched in September, will have a maturity date of 31 July 2033. Later this year a new green bond for retail investors will also go on sale. Coupon rates are set to be announced in due course.

Here to help

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

News in Review

“Strong policy support has fuelled a vigorous but uneven recovery”

With the summer holiday season drawing to a close, travel stocks were impacted last week, following the latest announcement from the Transport Secretary. Although several additions were made to the green list, some countries moved to the red list and popular holiday spots such as Spain, Greece, France and Italy remain on the amber list, a disappointment for many travellers and travel firms alike.

On Friday, global investors were heavily focused on Jerome Powell’s Jackson Hole keynote speech. During the much-anticipated symposium of central bankers, the Federal Reserve Chairman said the US Central Bank could begin to withdraw stimulus later this year, but the evolving impact of the Delta variant will be closely monitored. Despite a recent spike in inflation, he said the bank was in no rush to raise interest rates. He commented, “Strong policy support has fuelled a vigorous but uneven recovery… We have said that we would continue our asset purchases at the current pace until we see substantial further progress toward our maximum employment and price stability goals.”

European stock markets bounced on Friday and US stocks hit record highs on Monday as the Fed’s cautious approach gave investors some reassurance that the central bank’s efforts to shore up the economy will be withdrawn gradually. US stocks slipped from record highs on Tuesday as investors concerns intensified about the surge in Delta variant cases.

UK business confidence has risen to its highest point in over four years according to the Lloyds Bank Business Barometer, which suggests growing optimism is being fuelled by expectations of stronger growth in the coming year and improvements in trading prospects.

Contactless limit on the rise

From 15 October, it has been confirmed that the contactless card limit is to rise from £45 to £100, an initiative first detailed in the Spring Budget in March. With almost two-thirds of all debit card transactions currently being made via contactless technology, regulators have said that businesses can decide whether to accept the higher limit or not. Chancellor Rishi Sunak commented, “Increasing the contactless limit will make it easier than ever to pay safely and securely. As people get back to the high street, millions of payments will be made simpler, providing a welcome boost for retailers and shoppers.” Concerns have been raised regarding the risk of fraud as the limit increases further.

July car production falls to lowest level in 65 years

In July, British car manufacturing output fell by 37.6%, the first fall since February and the worst July performance since 1956. The latest figures released by the Society of Motor Manufacturers and Traders (SMMT) emphasise how production volumes have been severely disrupted by global semiconductor shortages and staff absences caused by the ‘pingdemic.’ In July, production for the UK market declined by 38.7% while manufacturing for export also fell, down 37.4%.

Demand for alternatively fuelled models is picking up, with over a quarter (26%) of all cars made in July being alternatively fuelled, the highest share on record.

Mike Hawes, SMMT Chief Executive commented, “These figures lay bare the extremely tough conditions UK car manufacturers continue to face… The UK automotive industry is doing what it can to keep production lines going, testament to the adaptability of its workforce and manufacturing processes, but government can help by continuing the supportive COVID measures currently in place and boosting our competitiveness with a reduction in energy levies and business rates for a sector that is strategically important in delivering net zero.”

UK’s first green gilt set to mature in 2033

At least £15bn of green gilts are set to be issued in the current financial year, the proceeds of which will go towards funding environmental projects. With COP 26 on the horizon, the gilts form part of the Chancellor’s drive to assist the UK finance sector to meet its net zero ambitions. It was announced last week by the Debt Management Office, that the UK’s inaugural green gilts, set to be launched in September, will have a maturity date of 31 July 2033. Later this year a new green bond for retail investors will also go on sale. Coupon rates are set to be announced in due course.

Here to help

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

News in Review

‘It could be appropriate to start reducing the pace of asset purchases this year’

During a week in which the news agenda was dominated by Afghanistan, the US Federal Reserve warned it could start cutting back support for the economy sooner than markets had previously expected. Minutes from the Fed’s July meeting, released last Wednesday, revealed a willingness to begin tapering monthly asset purchases before the year end, ‘Looking ahead, most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year.’

The minutes also stated that officials judged ‘uncertainty was quite high’ about the outlook and showed relatively little consensus among policymakers on a range of key issues, including whether inflation, unemployment or the pandemic, currently pose the biggest threat to economic recovery.

US markets rose on Tuesday following FDA approval of the Pfizer vaccine and ahead of Thursday’s Federal Reserve conference when Chairman Jerome Powell is expected to outline the central bank’s outlook on US economic recovery.

UK recovery losing momentum

On this side of the Atlantic, a closely monitored survey, published on Monday, found that staff and supply shortages are taking their toll on the UK’s economic recovery. The IHS Markit/CIPS flash composite Purchasing Managers’ Index (PMI) fell to a six-month low of 55.3 in August, suggesting that the post-lockdown economic rebound is losing momentum. On a more positive note, the PMI’s measure of employment growth rose to its highest ever level in August.

Inflation falls more than expected

In the last seven days, the Office for National Statistics (ONS) released a raft of economic data, including the latest inflation figures which revealed a sharper-than-expected slowdown in price growth. The Consumer Prices Index fell back to the Bank of England’s 2% target last month, following a 2.5% rise in June. Commenting on the data, ONS Deputy National Statistician, Jonathan Athow, said “Inflation fell back in July across a broad range of goods and services, including clothing, which decreased with summer sales returning after the pandemic hit the sector last year.”

Despite July’s fall, analysts still expect inflation to rise again later this year, partly due to the removal of a temporary hospitality VAT cut and a hike in energy bills. In addition, ONS producer prices data revealed that output costs increased by 4.9% in July – the fastest annual rate of growth in almost 10 years – while input costs jumped by a higher-than-expected 9.9%. Federation of Small Businesses National Chair, Mike Cherry, commented, “While consumer costs have cooled, it’s a different story for inputs, with producer prices continuing their upward march this month.”

Retail sales down

ONS data released last Friday also showed retail sales fell unexpectedly in July; sales volumes declined by 2.5% compared to June, the largest monthly decline since January. According to retailer feedback, a combination of bad weather and England’s Euro 2020 progress kept shoppers at home, although analysts also blamed a rise in the number of COVID cases which forced some consumers to self-isolate and potentially prompted others to stay away from the shops.

Government borrowing falls

Last week saw publication of the latest public sector finance statistics, which showed borrowing continuing to ease from last year’s mammoth levels. In July, the government borrowed £10.4bn; although this still represents the second-highest July number ever recorded, it was almost half the level borrowed in the same month of 2020. ONS said the budget deficit in the first four months of this fiscal year is now £26.1bn below the Office for Budget Responsibility’s March forecast, reflecting both stronger-than-anticipated receipts and lower-than-expected spending.

‘Triple lock’ could be diluted

It is reported that the ‘triple lock’ – which guarantees the State Pension will rise in line with the highest of earnings, inflation or 2.5% – looks set to be watered down. A COVID-related surge in average earnings means pensioners could be in line for a rise of over 8% next year if the government honours its manifesto commitment. Last Wednesday the Prime Minister’s spokesperson was quoted as saying, “I think we recognise the legitimate concerns about potentially artificially inflated earnings impacting the uprating of pensions.”

Here to help

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

Is your home worth more than you think?

Do you think you know how much your property is worth? Would you be surprised if it was worth much more – or much less?

Many homeowners’ estimates don’t live up to reality, with nearly half of respondents (45%) to a survey1 undervaluing their property and 25% overestimating its worth. Less than a third were correct.

Those who underestimated, did so by £46,305 on average, while those who overvalued thought their property was worth £44,313 more. Taking all responses together, homeowners were shown to be underestimating the value of their properties by £9,470 on average, or £237bn collectively.

What is your home worth?

Understanding your property’s value could have a significant impact on your life. Of those who sold their home after taking the survey, 81% said their unexpected windfall had enabled them to improve their lifestyle.

1Zoopla, 2021

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments. You may have to pay an early repayment charge to your existing lender if you remortgage.

Taking emotion (and colour!) away from investment decisions

It is fascinating to consider the psychology of investing. There are many behavioural traps that investors could find themselves falling into during times of market volatility, when knee jerk reactions can take hold.

One example being ‘the anchoring trap’, which is where investors rely too much on their perceptions of an investment, which could be totally incorrect, rather than being flexible in their thinking and responsive to new data.

Separating emotions from market reaction and investment selection is a whole different challenge. It can be hard to manage our impulses when we see markets fluctuate and we can easily underestimate the risks associated with investments. These are just a couple of reasons why investors sometimes make poor decisions based on emotion, which can result in financial loss.

Red flag to a bull

Another added complication has been highlighted by an interesting new study1 which shows that if financial information is presented in red, it tends to make people more pessimistic about the market than presenting the same facts in blue or black. It seems that using the colour red to represent financial data, influences individuals’ risk preferences, expectations of future stock returns and trading decisions. Such effects are not present in those who are colour blind and are muted in China, where red represents prosperity.

Assistant Professor of Finance at the University of Kansas, William Bazley, who undertook the research, commented on the findings, “The use of colour could lead to investors avoiding the platform or delaying important financial decisions, which could have deleterious long-term consequences. In Western cultures, conditioning of red colour and experiences start in early schooling as students receive feedback regarding academic errors in red. Red is associated with alarms and stop signs that convey danger and command enhanced attention.”

Good behaviour

The good news is that having your finances and portfolio managed for you is one effective way you can avoid these potential behavioural pitfalls. You can rely on us to make informed, consistent investment decisions, not based on emotion but on a robust, objective and disciplined process. We take the time to understand your objectives, apply a rigorous process and advise you on the strategies and products most appropriate for you.

1The University of Kansas, 2021

The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

Is IHT change on the cards?

It’s been three years since then-Chancellor Philip Hammond asked the Office of Tax Simplification to look into potential amendments to the Inheritance Tax (IHT) regime1. Since then, no changes have been made to the tax incurred when wealth passes onto the next generation; could Rishi Sunak be the one to take up the mantle once more?2

A significant, pandemic-shaped deficit means that some unwelcome tax hikes could be on the cards. And IHT is a logical target for some economists, who see this tax as a way of generating income for the Treasury with little economic impact, as well as driving social mobility.

This was the conclusion of research from the Institute for Fiscal Studies (IFS) entitled Inheritance and inequality over the life cycle: what will they mean for younger generations? The paper found that inheritances have comprised an increasing proportion of national income over the past 50 years – something that could influence policymakers’ decisions around the taxation of wealth transfer.

Inheritance inequality

According to the IFS, those born in the 1980s can expect inheritances worth an average 16% of their lifetime income – against just 9% for those born 20 years earlier. This trend is likely to lead to rising levels of wealth inequality between rich and poor families. Arguably, a stricter IHT regime could help lessen the impact.

Younger generations’ fortunes largely depend on how wealthy their parents are, with the 1960s and 1980s generations whose parents occupy the top fifth of the wealth scale expecting a lifetime boost of 17% and 29% from their inheritances, respectively. By contrast, the boost is just 2% and 5% respectively for those whose parents are on the lowest rung.

This means that not only are there differences by age, with the younger group benefiting more, but also by differences in parental wealth, which delivers a significant benefit. However, with ‘levelling-up’ an unequal UK, high on our cash-strapped government’s agenda, IHT is a likely candidate for reforms – and that could hit wealthier families hard. It’s best to prepare for a range of scenarios and take professional advice for the best financial strategy.

1gov.uk, 2018

2gov.uk, 2019

The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation. Inheritance Tax Planning is not regulated by the Financial Conduct Authority.

Residential Property Review – August 2021

Transition to eco homes hotting up

With climate issues becoming ever more urgent, policymakers and the housing industry are increasingly turning their attention to sustainable property development.

Making homes greener will play an important part in the UK’s efforts to achieve net-zero emissions by 2050: new and existing homes together account for 20% of the UK’s greenhouse gas emissions. As such, any improvements the sector makes could translate into a major environmental benefit.

The government’s Future Homes Standard, which comes into effect in 2025, commits to making all new-build homes in England ‘future-proofed with low carbon heating and world-leading levels of energy efficiency.’

Meanwhile, in response to growing interest in eco-friendly homes, several lenders have started offering green mortgages. Typically, these allow buyers of energy efficient homes to get lower rates on certain mortgages.

Some commentators, however, have been critical, suggesting that the current range of green mortgages is too limited in scope. It is suggested that the next steps may involve offering incentives to homeowners for improving less efficient homes, rather than simply rewarding buyers of A or B-rated properties.

Sales spree ahead of Stamp Duty changes

A race to beat the Stamp Duty holiday deadline has pushed UK house buying to its highest level since records began.

According to Savills, the non-seasonally adjusted estimate for residential property transactions in June rose to a monthly record of 213,120. This was double the June average for 2017-2019 and more than three times June 2020’s coronavirus-impacted total.

June is traditionally a busy month for transactions. This year, though, the buying spree was further fuelled by the imminent tapering of the Stamp Duty holiday. Until June, buyers in England and Northern Ireland paid no tax on the first £500,000; the nil-rate threshold has now been reduced to £250,000 until 1 October, when the threshold reverts to £125,000.

Analysts believe there will inevitably be some slowdown in the coming months, although the market is not expected to grind to a complete halt. Agreed sales remain above average with increases in activity especially noteworthy for higher value homes.

Enquiries dip as new instructions fall again

A scarcity of new instructions and relatively high level of enquiries is still causing an excess of demand over supply in the UK residential property market, according to the July survey published by the Royal Institution of Chartered Surveyors (RICS).

The net balance for new instructions in July fell to -46% (down from -35% in June), a fourth successive monthly decline. The survey also reported an easing in demand following the Stamp Duty changes, with new buyer enquiries falling to a net balance of -9% in July (from +10% a month earlier). Although this slip in enquiries ends a run of four successive monthly increases, demand remains ahead of supply.

Commenting on the findings, Simon Rubinsohn, RICS Chief Economist, said, “Although the tapering in Stamp Duty is beginning to have some impact on RICS activity indicators, the overall tone to the market remains firm.“

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House Prices Headline statistics

House Price Index (June 2021)* 139.3*

Average House Price £265,668

Monthly Change 4.5%

Annual Change 13.2%

*(Jan 2015 = 100)

  • Average house prices in the UK increased by 13.2% in the year to June 2021
  • On a non-seasonally adjusted basis, average house prices in the UK increased by 4.5% between May and June 2021
  • House price growth was strongest in the North West where prices increased by 18.6% in the year to June 2021.

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House Prices Price change by region

Region   Monthly Change (%) Annual Change (%) Average Price (£)
England   4.9 13.3 £284,029
Northern Ireland
(Quarter 2 – 2021)		 2.9 9.0 £153,449
Scotland 2.4 12.0 £173,961
Wales   4.6 16.7 £195,291
East Midlands 5.1 14.3 £226,846
East of England 4.5 12.1 £327,017
London 2.5 6.3 £510,299
North East 5.9 15.3 £149,521
North West 6.8 18.6 £200,222
South East 2.7 10.5 £355,948
South West 5.5 13.7 £294,906
West Midlands Region 5.7 15.0 £231,429
Yorkshire & The Humber 7.1 15.8 £194,518

Source: The Land Registry
Release date: 18/08/21 Next date release: 15/09/21

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Average monthly price by property type – June 2021

Property Type Annual Increase
Detached
£410,054		 15.6%
Semi-detached
£254,441		 13.5%
Terraced
£218,484		 14.0%
Flat / maisonette
£221,211		 8.4%

Source: The Land Registry
Release date: 18/08/21


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Residential market outlook


“There is a continued drumbeat of demand for more space among buyers, both inside and outside, funnelling demand towards houses, resulting in stronger price growth for these properties. Sellers will need to consider this when it comes to pricing expectations.“

Gráinne Gilmore, Head of Research at Zoopla
Source: Zoopla August 2021

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Contains HM Land Registry data © Crown copyright and database right 2017. This data is licensed under the Open Government Licence v3.0.

All details are correct at the time of writing (19 August 2021)

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

Commercial Property Market Review – August 2021

Investment in student accommodation nears £2bn in H1

The latest data from Knight Frank shows that investor appetite for purpose-built student accommodation (PBSA) was strong in H1, despite the sector being adversely impacted by the pandemic, with restrictions limiting international travel and disrupting study for a large proportion of students. The sector is in a strong position to bounce back as face-to-face teaching resumes and a pursuit for the ‘university experience’ incites students.

Total investor spending for the first half of the year reached almost £2bn, as deal volumes rose, and investors looked beyond short-term disruption. Cumulative deal volumes to the end of June were 47% higher than the same period last year and 4% higher than in 2019. Recent UCAS data shows increased optimism for the scale of demand this autumn, with year-on-year rises evident from both UK and overseas applications.

Summarising the uptick in investment transactions, Knight Frank believe it shows that investors, ‘have confidence in the sector’s ability to deliver long-term, stable income streams. It also reflects a wider pivot which has taken place over the last 18 months, from institutional investors towards residential assets across all age groups. Rising student numbers and ongoing low supply ratios in many university cities are also driving investor demand for PBSA.’

Indicators point to improving market sentiment in Q2

The newly compiled Commercial Property Survey from the Royal Institution of Chartered Surveyors, for Q2 2021, clearly highlights an improvement in overall market sentiment, with 56% of respondents currently feeling that market conditions are consistent with an upturn, this is an increase from 38% in Q1 this year.

The industrial sector continues to experience sharp growth in interest from both investors and occupiers. Respondents to the quarterly survey refer to a continuation in the sharp contraction in availability of leasable industrial space, with the net balance falling deeper into negative territory at -48%, compared with -39% in Q1. Over the next year, respondents expect strong industrial capital value growth across all UK regions.

Encouragingly, trends in demand in the office sector seem more stable than the previous quarter. Although both secondary and prime retail values are predicted to decline, projections are less negative than in previous surveys. Retail availability continues its upward trajectory. Across the retail and office sectors, returning net balances of +52% and +40% respectively in Q2, were recorded.

Demand varies widely at a sector level, with current sector net balances measuring +63% for industrials (versus +57% in Q1), -3% for offices (versus -34% in Q1) and -25% for retail (versus -55% in Q1).

In what the report declared a ‘noteworthy development‘, capital value projections are now only ‘marginally negative for hotels‘, with the latest net balance shifting significantly from -47% in Q1 to -4% in Q2.

Rising student numbers and ongoing low supply ratios in many university cities are also driving investor demand for PBSA

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Commercial property currently for sale in the UK

  • Regions with the highest number of commercial properties for sale currently are South West and North West England
  • Northern Ireland currently has the lowest number of commercial properties for sale (26 properties)
  • There are currently 1,324 commercial properties for sale in London, the average asking price is £1,550,639.

Region No. properties AVG. asking price
London 1,324 £1,550,639
South East England 1,143 £2,074,320
East Midlands 745 £1,007,808
East of England 733 £633,795
North East England 777 £349,285
North West England 1,270 £446,614
South West England 1,516 £536,991
West Midlands 1,137 £488,318
Yorkshire and The Humber 1,117 £316,941
Isle of Man 51 £486,457
Scotland 1,102 £304,831
Wales 755 £422,476
Northern Ireland 26 £412,121

Source: Zoopla, data extracted 19 August 2021

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Commercial property outlook

Occupier demand – broken down by sector



  • A headline net balance of +16% of contributors reported a pick-up in overall tenant demand over Q2, compared to -5% in the previous quarter
  • A net balance of +63% reported an increase in demand for industrial space
  • Retail and office sectors remain in negative territory at -25% and -3% respectively.

Source: RICS, UK Commercial Property Market Survey, Q2 2021

Availability – broken down by sector

  • There is a continuing drop in the availability of industrial space, with the latest net balance falling to -48% in Q2
  • Availability remains on an upward trajectory for office and retail, returning net balances of +40% and +52% respectively in Q2.

Source: RICS, UK Commercial Property Market Survey, Q2 2021

All details are correct at the time of writing (19 August 2021)

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It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

Younger investors and social media

The Financial Conduct Authority (FCA) is concerned about how much influence social media could be having on younger investors, who could unknowingly be taking on significant financial risks.

According to the FCA, this younger, more diverse group of investors is highly reliant on social media platforms such as Instagram, YouTube, and TikTok for investment tips and advice, but they tend to lack the knowledge and understanding required to make informed choices.

A mismatch of confidence and resilience

The FCA expressed concerns that these investors are confidently investing in riskier products despite a ‘striking’ lack of awareness of any associated risk. Shockingly, 45% did not associate ‘losing some money’ as a potential risk.

This group also shows low levels of financial resilience, with the findings showing that a significant loss could have a fundamental impact on the lifestyles of 59% of inexperienced investors.

Five questions to ask yourself

A digital disruption campaign has been launched by the FCA to raise awareness of the risks, prompting people to ask themselves five questions:

1.            Am I comfortable with the level of risk?

2.            Do I fully understand the investment being offered to me?

3.            Am I protected if things go wrong?

4.            Are my investments regulated?

5.            Should I get financial advice?

Take care of your financial future Its pays to take advice – we can help develop an investment plan suited to your long-term goals and risk profile.

The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

News in Review

“Employers are keen to re-build following an incredibly turbulent 18 months for business”

With double jabbed people, as well as those aged under 18 in England and Northern Ireland, no longer legally required to self-isolate if they are identified as a close contact of a positive COVID-19 case, many will be breathing a sigh of relief, not least businesses who have struggled with staff shortages. A recent survey of 700 company directors conducted by the Institute of Directors (IoD), revealed that 44% of businesses are currently experiencing staff shortages, a situation which risks undermining the recovery and fuelling inflationary pressures.

While 21% of directors attribute shortages to employees forced to self-isolate due to COVID contacts, a massive 65% of directors said it’s due to the UK’s long-term skills gap, with 40% struggling because of a lack of potential workers from the EU.

Senior Policy Advisor at the IoD, Joe Fitzsimons, commented, “Employers are keen to re-build following an incredibly turbulent 18 months for business… the issue of labour shortages is proving disruptive across a huge range of sectors and at all levels. Ensuring that workers are available with the right skillset to perform effectively is a crucial pre-requisite for recovery.”

UK economic rebound confirmed in Q2

The easing of restrictions helped to support the UK economy, which grew by 4.8% in Q2, according to data released last week from the Office for National Statistics (ONS). In terms of output, growth was primarily driven by retail trade, food service activities and accommodation. Although slightly below Bank of England estimates for 5% growth, the main driver of growth was consumer spending, which increased by 7.3% during Q2, ahead of expectations. ONS data highlighted that the level of GDP is currently 4.4% below where it was pre-pandemic Q4 2019.

Head of Economics at the British Chambers of Commerce (BCC), Suren Thiru, reflected on the Q2 data set from the ONS, “Strong growth in the second quarter may be the high point for the UK economy, with economic activity likely to moderate in the third quarter as staff shortages, supply chain disruption and consumer caution to spend, limits any gains from the lifting of restrictions in July… Against this backdrop, policymakers must guard against complacency over the underlying strength of the recovery. A comprehensive rebuild strategy to turbocharge growth post-COVID is needed, alongside a clear plan for dealing with any future virus response, to give firms the confidence to start firing on all cylinders again.”

Labour statistics released by ONS on Tuesday confirmed that job vacancies have hit a record high, reaching 953,000 in the three months to July. The unemployment rate fell to 4.7% in the three months to June.

Fund inflows bolstered by earnings strength

It has been reported that in the week to 11 August, global equity funds registered inflows for a third consecutive week, with positive economic data and strong corporate earnings from the US, supporting sentiment. Inflows of $10.12bn were received into global equity funds, representing an uplift of 12% on the previous weeks’ figures. The majority of the inflows ($5.6bn) were received into European equity funds, with US counterparts obtaining $2.7bn. In Q2, it has been reported that almost 70% of global firms have beaten analysts’ profit estimates, posting average growth of 143%. Leading the earnings recovery are firms in cyclical sectors such as industrials.

China unveils regulatory plan

Last week, the Chinese government announced a plan outlining tighter economic regulation. New rules are due to be introduced on areas including technology, national security and monopolies. The 10-point plan details the strengthening of laws on science and technological innovation, culture and education. Regulations relating to China’s digital economy, including internet finance, artificial intelligence and cloud computing are also due to be evaluated.

Oil price bounce back – US urges action

As countries have gradually reopened, the oil price has rebounded. In July, members of OPEC (Organization of the Petroleum Exporting Countries) and its allies agreed to boost supply to help stabilise the situation, adding 400,000 barrels a day to their output. According to the White House, this is ‘simply not enough,’ urging the world’s top oil producers to help quell rising fuel prices to support the global recovery.

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