The EU Clocking Is Ticking

 

The clock is ticking as we get ever closer……next month we get to say whether we want to stay or leave the EU.

 

Forget Eurovision……ignore Euro 2016……the result of this competition will be far-reaching for decades to come.

 

So, what should we do?

 

We first had the Prime Minister suggesting any withdrawal might bring about World War III, even though the only war that might occur after the vote is a civil one within the Conservative Party. Then Big Bad Boris (in his German-built Brexit battle bus) argued that the real EU project is not a million miles from the aims of some of history's most diabolical dictators. However dramatic those arguments might have been, they've had little impact, with the latest polls still too tight to call.

 

46% Remain

43% Leave

11% Undecided

 

With just four weeks left to go, I wonder what else could ‘trump’ the threat of a new world war to swing the voters!

 

In the EU referendum it's often been hard to tell apart the heroes from the villains, with Cameron on the same platform as Corbyn and Sturgeon, while many in his own cabinet have been lining up against him alongside old enemies. Confused? You should be.

 

But back to the big question……should we stay or should we go?

 

While I have heard very few good arguments for leaving (and my sensible head tells me to stay), the little Devil in me wonders what might happen if Brexit wins the day.

 

That we might never know if we decide it just might for now be better to stick with the Devil we know.

Haldane Pain

 

 

There has been quite a kerfuffle in the economic / pension world over the past week.

 

In short, Andy Haldane who is the Bank of England’s Chief Economist (he’s a big deal) decided to go public with his opinion that “I confess to not being able to make the remotest sense of pensions”.

 

Oh dear.

 

Not having a ‘foggy’ about pensions is pretty damn important given that there are hundreds of billions sloshing around in those darn pensions. Just a 1% collective change in how these pensions are invested could cause a financial collapse the likes of which we have never seen before. Or just a 1% collective withdrawal from pensions would see inflation reach 15% within a heartbeat. Or there is the financial impact of the State Pension rising from age 65 to 66, 67 and 68. Just a couple of thoughts off the top of my head that make pensions pretty important don’t you think?

 

Being able to make sense of pensions should be the bear minimum prerequisite for the role of a Chief Economist surely?

 

This is the same man that was voted one of the ‘most influential people in the world’ by Time magazine in 2014.

 

No further questions your honour.

Whitehall Shortfall

 

 

You’ve got to love this story……for all the wrong reasons.

 

So the story is that the Cabinet Office decided 2½ years ago to farm out Whitehall’s office function to save up to £500 million a year. Ministers transferred back-office functions like human resources, payroll and accounts to private sector companies in a plan which was supposed to “radically improve efficiency across departments”.

 

At the time, Cabinet Minister Francis Maude stated “it will save the taxpayer half a billion pounds a year.” Well that was me sold straight away. £500 million in the public coffers can only be a good thing.

 

Fast forward 2½ years……and there has been an official independent spending review (by the National Audit Office – cardigan wearers which can be trusted) which has concluded that £500 million a year saving has not materialised and it has actually ended up costing £4 million a year more than previously.

 

It has blamed an in-efficient hand over by the Cabinet Office and stated that costs will continue to rise as a result.

 

Which all leaves the Government rather embarrassed with a large helping of egg on face.

 

But we shouldn’t just take this story lightly when we stop and think about it……

 

Firstly, they are messing about with our money and making poor decisions.

 

Secondly, if they can’t implement an efficiency saving how can the UK public have confidence for other public money to be managed carefully?

 

Thirdly, why has nobody been held accountable for this (especially at a time of sweeping austerity measures and public sector cuts)?

 

All in all, a pathetic story which leaves a bitter taste in the mouth.

Right Bloody Scandal?

  

The bailout of the banking sector was at best a mess and at worse a scandal, with no obvious or clear winners to date. The periodic update of the financial positions of the banks we have a stake in does little to create confidence.

 

Enter stage right……‘Our’ Royal Bank of Scotland has reported a £968 million loss for the first quarter of 2016. Just to ensure a couple of points are put into perspective for you:

 

1.   By the word ‘our’ I refer to our 73% public ownership of the bank.

 

2.   The £968 million loss was double the loss in the same period of 2015.

 

So all not looking good then? Well, that’s the theme that the press / media are running with. But scratch beneath the surface and take a ‘glass half full’ approach and actually……

 

3.   The losses included a one-off dividend payment of £1.2 billion to the UK Government to allow dividend payments to shareholders in the future. Or to put that another way……it would have posted a profit of £225 million.

 

We could (and I have) debated on whether it would have been more financially beneficial to have let RBS fail......but there do appear to be green shoots of recovery for the bank, which in turn means a financial return for the UK public purse.

 

So the big question remains, is the Royal Bank of Scotland glass ‘half full’ or ‘half empty’.

Nicer ISA?

 

 

Individual Savings Accounts (ISAs) were introduce in April 1999 and designed to offer a very simple to understand tax free environment for us all to save into. Well, that was the intention.

 

Fast forward 17 years (and absurd levels of political meddling) and I thought the current state of ISAs couldn’t offer a bigger contradiction to the ‘simple’ concept given that we have Cash ISA, Stocks & Shares ISA, Junior ISA, Innovative Finance ISA, Flexible ISA and Help To Buy ISA. How wrong was I……step forward the new Lifetime ISA to be added to the spaghetti ISA soup.

 

History tells us that when you make something complicated that is financial or tax related, the masses will be turned off from it. The complication will defeat the objective. Just look at Pensions as a great example…..the complicated rules create the disinterest. You have to feel incredibly sorry for the under 40’s who simply don’t know whether they are coming or going with the various ISA and Pension options available. At best it is a minefield. At worst it is an incentive to ignore saving for the long term all together.

 

In reality, the new Lifetime ISA was a typical political / Budget shiny headline, not backed up with any reality. There are so many overlapping schemes for tax exempt savings that I really do question the motives of W1.

 

Until there is a clear and simple path, confusion will continue to reign.

 

Such an avoidable shame.