The Month That Was……September 2018

Aside from the compulsory pictures of anyone under the age of 14 returning to school in their highly polished shoes being plastered all over social media (I must confess to a selfie or two with a semi-embarrassed 4 year old offspring!), the subject of Brexit was kind of a big deal in September. 

 

Regardless of whether you are bored with it, agree with it, understand it, voted for or against it……Brexit has dominated the news pretty much every day during September. Always up for a challenge, The Trump has done his best to muscle in on the news action also.

 

So how will September 2018 be remembered?

Jobs, Growth & Income  

Economic growth hit 0.6% for the last quarter, the best gain since July last year and incomes are up 2.9% (a figure that has not been bettered since July 2015).

 

With inflation for the month at 2.4%, real wage growth rose to 0.5% above inflation. High levels of employment could finally be passing through to our incomes as firms compete for our work.

 

It will take a long time to repair the damage to incomes over the decade since the financial crisis. But with economic growth stronger and the possibility of some form of Brexit deal rising, this is certainly better news for the economy overall.

 

Higher wages can feed through to higher levels of consumer spending. And consumer spending drives around two-thirds of what happens in the economy.

 

Solid figures and a solid start. Now to sustain it!

 

Wrexit

Theresa May headed to Salzburg to meet with EU leaders to thrash out some middle ground that we could all agree on.

 

However, what she actually got was a huge cold shoulder and a hard line from those overseas. No negotiations, just a simple “no” (nein, nao, non, etc.) to our starter for ten.

 

The deadline for the proposed exit terms is the end of October, which is then to be implemented from 29 March 2019. Not looking too good is it!

 

Expect the amount of press and media coverage to increase dramatically during October as a consequence. Expect endless politicians to wheel out their expert opinion on what the Prime Minister is doing wrong, without actually offering anything concrete to assist.

 

Ah……UK politics at its best.

 

I couldn’t help but smile at the French Presidents summary of the situation. Macron said, “Brexit is the choice of the British people... pushed by those who predicted easy solutions... Those people are liars. They left the next day so they didn’t have to manage it.”

 

Summed up perfectly. C’est bon!

 

Trumping

A similar story was recorded in the US.

Annual wage growth hit a nine-year high in the US last month and the economy created more jobs than expected. When the largest economy in the world has more money in its pocket, consumer spending will ultimately be the outcome. Given that the US is the biggest consumer driven economy in the world (after the UK), all roads lead towards a prosperous few years.

And you can guess who is taking all the credit for it……‘Trump’eting his own tune!

 

Wronga

Wonga announced this month that it is officially in administration.  With pay-day loans back in the headlines this once again throws up a couple of recurring questions about the personal finance market. 

Why is it that people continue to take out loans at an APR of around 1,500%?

 

Why is it that personal finance is so poorly understood in the UK?

 

The first question is the easy one to answer……good packaging and marketing can sell a bad product, and Wonga has been one of many firms using glossy, brightly coloured adverts to…obscure some of the more pertinent facts.

 

The second question is tougher. Surely introducing personal finance into the school curriculum is now a must.  It is a stinging indictment of the UK system that most young people are still bereft of the basics in personal savings – regardless of their level of education.  Not everyone needs A levels or a university degree……but everyone in the UK at some point will need to know how interest works (whether for saving or borrowing).

 

If adding this to the curriculum is simply too revolutionary, the minimum we should expect is a warning about the power of compounding interest on debt being mandatory on television adverts.

 

It’s a travesty on so many levels.

 

 

September’s Biggest Loser……Option 1 – Boris Johnson (he is pretty much an ever present)

Boris Johnson was a key player in the ‘out’ campaign yet he has been the most ineffectual player since. He is simply causing chaos in the Conservatives and he keeps ‘throwing rocks’ at Theresa May’s Chequers plan.

 

And the more rocks he throws, the more publicity he gets to ignite the flames to continue being obstructive. Describing the Prime Minister’s Brexit plans as a “suicide vest” sums up his position perfectly.

 

But here is the thing……he has not come up with a credible alternative. His whole agenda is to get Theresa May to change her plans by throwing rocks rather than offering a decent alternative that might make her change her mind. Just a thought.

 

September’s Biggest Loser……Option 2 – Christine Lagarde (new entry)  

The International Monetary Fund’s managing director, Christine Lagarde, has warned that a “no-deal Brexit in World Trade Organisation terms would entail substantial costs for the UK economy”.

 

Wow……18 months into negotiations and stating the bleeding obvious is all she can offer? As someone with such a prominent position that is independent of the EU, Christine Lagarde has the power to smooth the battleground out and speed up Brexit negotiations.

 

Alternatively, she could just throw a few rocks, albeit smaller than Boris’s.

 

Mindboggling.

 

September’s Biggest Loser……Option 3 – Barclays (again)

Having been hit with billions in compensation because it couldn’t trust itself, staff and working practices to sell PPI appropriately, Barclays has apologised for giving wrong information to tens of thousands of customers who started compensation claims but were told by the bank that they did not hold PPI policies……yet they did.

 

Is it just me or is the process of asking banks to judge if compensation is merited a bit like asking an arsonist to put out a fire?

 

I am sure there is some logic to it……I just can’t find it!

 

And Finally……

Never one to miss a self-promotion opportunity (even in the face of death and devastation)…… during his address to the nation on the hurricane that hit the US, President Trump said "the hurricane is one of the wettest we've ever seen from the standpoint of water".

 

He really is the gift that keeps on giving. I know he has set the bar pretty high but that statement is one of the dumbest I’ve ever heard, from the standpoint of words.