The Month That Was……March 2018

 

Aside from the political flirting and posturing with our European ‘friends’, the month was dominated (for what seems like the 400th month in a row) by a certain member of the Trump family. 

 

Trade Wars – US v China

One of the few messages of any worth during his election campaign was the need to get America working again……and true to his word, much of his efforts in his first year of office (other than annoying as many people as possible – even if that resulted in a war!) has been to readdress the balance of importing cheap materials and encouraging locally produced alternatives to create jobs and retain wealth within the US borders.

 

In theory, it’s a clever long-term play that will reap economic benefits for the world’s largest and most important economy. The unintended / intended (delete as appropriate) consequence though is a potential trade war with the second largest economy in the world……China.

 

Trump’s first shot at the grand master plan was to tax steel imports into the US by a 25% tariff, thus encouraging US businesses to buy. The issue is that China produces more steel in a month than the US in a year and the result will be the US no longer being at the mercy of China.

 

This is likely to see China and other trade partners retaliate and it could cost US jobs in other parts of the country instead.

 

Time will tell if the hysteria in the press / media of ‘Trade Wars’ between economic super powers does play out but the uncertainty is intriguing if not concerning.  

 

Despite the threat of an economic boxing match with China, the US economy surged last month (as measured by jobs created)……which was far in excess of expectations.

Spring In The Statement?

Chancellor Philip Hammond unveiled his first Spring Statement which was all very much as predicted…… slight improvement in public finances and growth this year but longer term challenges of weaker growth and pay unchanged.

 

He claimed the UK economy had reached a turning point and there was "light at the end of the tunnel". There was no talk of an immediate end to austerity but hinted at possible spending rises in the future.

 

Light at the end of the tunnel? I’m always very wary of the UK’s economic forecasts and big political statements at the moment due to the relatively unknown curveball that is ‘Brexit’ which still has many implications to the UK economy.  

 

Overall, I felt that if he spent less time attacking the Labour Party in his Spring Statement, we would actually have more substance to his message than political point scoring.

Deranged Divorce Bill

One of the few things of interest from the Spring Statement was the independent calculation that the UK will continue to pay contributions into the EU budget until 2064 - 45 years after the official date of Brexit - with the total bill amounting to £37.1 billion.

 

Just to repeat that……45 years.

 

The main reason for this is that the UK will have an on-going liability for a proportion of EU staff's pensions earned when the UK was a member.

 

No surprise that the Chancellor skirted over this with much haste during his statement.

 

Leg Waxing Is Soooooo Last Year

The price movements of 700 goods and services are measured in 20,000 UK outlets to calculate inflation in the UK. They are a big deal as annual changes to many state benefits, pensions and social charges are linked to this measurement of inflation.

 

Periodically, this basket of goods and service changes to reflect different behaviours and March saw some ‘interesting’ changes……

 

In the basket goes……exercise leggings, chilled mashed potato, body moisturising lotion and quiche.

 

Out of the basket goes……pork pies, edam cheese, bottle of larger in a nightclub and leg waxing.

 

Exactly how the decisions are reached on the basket is very random……however it does seem logical that leggings would be included if leg waxing is no longer in vogue!

 

The basket is really important……yet it all seems so very random.

 

 

Watching Brief……Again!

Mortgage products allowing applicants to put down a deposit of just 5% are now becoming much more common a latest Moneyfacts survey has shown.

 

Some 307 such deals are now on the market in the UK and this is the first time since the 2008 financial crisis that the number has surpassed 300. The number of mortgage deals remains much lower than when the financial crisis struck (411 in April 2008) but it is the steady increase in number that is the concern.

 

Add in the potential Brexit (obviously) impact to the economy and potential negative impact to house prices, the concern is that lending with only a 5% deposit almost encourages negativity equity.

 

Certainly a watching brief to ensure lessons have been learnt.

 

And Finally……

The Government is to consult about the viability of small denomination coins and whether the continued use is needed. Wait for it……

 

2p or not 2p? That is the question!