Elements IFA - Female Financial Advice, Financial Advice for Women

Although US interest rates remained on hold last week it seems that the markets now appear to be led by linguistic pedants leaping on the slightest change in intimation of the phrases used by the Fed in their statements. In fact when you read the latest statement it is completed with a thundering announcement that “Future policy will depend on the evolution of the outlook for both inflation and economic growth” – well stone me if that is not what John Cleese would have referred to as the “stunningly obvious” and hardly giving the market a clear direction on interest rate policy.

In fact it was the omission of just two words that created the bullish enthusiasm –“additional firming” - and that was enough to convince traders that the next move is likely to be down, but seemingly forgetting that when there is a cut it may well be rather small and possibly not enough to encourage any huge economic pick up – and anyway, at the current rate, the markets will have discounted it several times over!

It seems as though the top of the cycle may well be in sight and that might even apply to the UK, although the market is still pricing in at least one further rise.

I am sorry but was I supposed to be impressed by that Budget? Enough has been written on the content but as for the effects, then there will still be more to be felt. Firstly the issue for smaller company tax rises – I appreciate he was aiming at individuals trying to dodge income tax, but with such a blunt and unsubtle move he has also “clobbered” those perfectly viable smaller businesses which don’t actually have large investment requirements on which they could get tax breaks. The future of the UK economy is with smaller companies being nurtured and fostered – after all, where will the next generation of larger companies come from? Especially when all the rest have been bought by Private Equity outfits and the Spanish!

Let’s look at the bigger picture though; we have a government debt level which has been highlighted as a concern by the IMF and personal debt running at over 100% of GDP. With Government expenditure being reined in, that leaves us dependent upon consumer expenditure which rests upon the valuation of our houses. Not a situation which fills me with the greatest of confidence.

I was actually hoping for a statesmanlike speech of a future Prime Minister and not the tinkering techniques of a testy technocrat. What about tax reforms and simplification as we have now over 8,300 pages of primary tax legislation (second apparently only to India)? No, instead we have the minutiae of changes to IHT levels and a pathetic rise in ISA allowances – but wait - at least we saw a reduction in VAT on nicotine patches. This is rearranging the sweeties on the shelf while the shop goes bust.

Oh yes and just a reminder that “Tax Freedom Day” falls on 1^st June – that is to say that the average UK citizen spends the first five months of the year working solidly for the benefit of Her Majesty’s Revenue. Only after five months do we get something for ourselves – only two months to go then

There is nothing like a swift seminar trip around the globe to gain some different perspectives of the world economy, and last week I had the opportunity of sampling three of the most dynamic centres in the world namely Dubai, Hong Kong and Singapore. What have they all got in common? The attitude that “you can” - but in rather in different ways. A very exciting concept, especially when compared with our rather negative attitudes back here in the UK.

However, there was one clear theme that came out of all three and that was not so much the nervousness of the recent market upheavals, but rather the longer term picture of the growth in the regional economies and especially in the Far East. With that comes, as I know especially within my own family, the rise of the Oriental consumer releasing savings hoarded over years and in many cases the first access to credit.

In certain ways in terms of holidays, the region reminds me of the Mediterranean in the late fifties and early sixties when development was just beginning and overseas holidays for the Europeans were just for the few. You can see now with the burgeoning of regional budget airlines and new resorts on islands we had never heard of before, that things are changing rapidly.

And finally…..after a week of delicious Eastern food it is always necessary to reset your food standards for the UK. 24 hours after returning, my expectations were heartily fulfilled by the announcement on the early Midland Mainline train from Nottingham to London – “I am afraid that first class food service cannot be carried out for the present as one of my colleagues has cut his hand on a baguette.” Damnably dangerous these British baguettes.