Not A Sleepy Party

The recent local elections are all done and dusted……but what is the big lesson learned a year out from the 2015 General Election?

Easy……ignore UKIP at your peril as they were the big winners.

Not by electing the most councillors - the three main parties have many more.

Not by making the most gains - Labour's gains are almost double those made by UKIP.

Not by taking control of councils - they run no town or city halls.

So……in what sense did UKIP win? Europe and all UKIP stand for.

Their victory was to complete the move from ‘party of protest’ that was only competitive in European Elections to one that is now wounding the big three up throughout the country. Talk of winning seats in the 2015 General Election next year no longer seems fanciful.

Any party serious about winning the 2015 General Election now how to react to what the public are saying by voting for UKIP. There has been plenty of negative comment written about Nigel Farage and UKIP but they have brought hot and emotional topics to the table that now need to be dealt with as the people have spoken……Europe and Immigration.

Ignore UKIP at your peril - the local election results tell all......

Interesting Reality Check

Whether we like it or not (or not I think!), the continuation of record breaking low interest rates will be confined to history before we know it. It is widely predicted that interest rates will rise over the next 6 – 12 months……probably in a gradual manner over a 2 – 3 year period.

 

Perhaps most worryingly is that we know it is coming but few are taking action to prevent / minimise the negative impact it will have.

 

More than 2 million of Britain's 8.4 million mortgagors will be forced to spend more than a third of their post-tax income on mortgage repayments if rates rise from 0.5% to 3.0% by 2018……which is broadly in line with market expectations. (Source: Resolution Foundation)

 

Bank of England data suggest higher interest rates could affect consumers more than previous cycles because 65% of mortgages are now linked directly to the Bank Base Rate…..compared with 38% before the financial crisis.

 

Be warned…..an interest rate cloud is coming.

 

Ignore it at your peril and start to be creative with covering your position!

 

Never dull is it!

2069 Years of Relevance

I read an interesting quote from Marcus Tullius Cicero in relation to Ancient Rome from 55 BC.

 

He said that:

 

“The Budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed. People must again learn to work instead of living on public assistance."

 

In the 2 months that have passed since the Budget, the quote made me revisit the key aspects.

http://stevesmithlive.blogspot.co.uk/2014/03/election-budget.html

http://stevesmithlive.blogspot.co.uk/2014/03/advice-furor_25.html

http://stevesmithlive.blogspot.co.uk/2014/04/substance-to-stench.html

The Budget wasn’t balanced, the Treasury isn’t being refilled, public debt is rising not falling, officialdom has never been more arrogant, our money is not well managed when helping foreign lands and there is little business incentive to create jobs to reduce public assistance and reliance. 

 

The quote is as relevant today as it was 2069 years ago. Yet with each budget that passes, we move further and further away from the ideals.

 

I tip my hat Marcus Tullius Cicero

R B S - An Update

A mixed bag of news for ‘our’ favourite bank RBS for Q1 2014.

 

On the plus side, it is making profit……and good profit at that. The troubled bank has doubled its profits in comparison to the same period in 2013.

 

How has RBS done it? Pretty simple really……sales up (14%) and costs down (15%)……the pretty basic features of most business profits. Which begs the question……why has it taken 5 ½ years to get to this stage.

 

There is a ‘but’ though……isn’t there always with RBS! The bank still expects to make a loss for 2014 due to the enormity of the fines / compensation they expect to receive during 2014.

 

So where does that leave the small matter of ‘us’ looking for a return on ‘our’ £45 billion investment in bailing the bank out?

 

More patience I’m afraid. The best case scenario is a return to sharing profit via a dividend payment in from 2016 (‘ish).

 

I’m not sure that too many people would have agreed at outset to an investment with no return for 8 years!

 

The pain continues I’m afraid.

PPI Is Sooooo Last Year

The Financial Conduct Authority’s latest report has highlighted that consumers are making less complaints about PPI mis-selling and the flood of gripes is slowing. There were 1.39 million new complaints in the last 6 months about the sale of the loan insurance……a fall of 22% compared with the previous 6 months.

 

I blogged last September on the next banking issue that was around the corner……

 

 

http://stevesmithlive.blogspot.co.uk/2013/09/and-next-bank-misselling-scandal-is.html

 

And low and behold……the regulator has announced that complaints about current accounts have risen by 8%.

 

As one storm ends, another one draws closer.

 

You make your bed……

Wronga

I’ve got a bit of a bee in my bonnet regarding anything that prays on the vulnerable or desperate……and ‘payday loans’ very quickly fit into that box.

Over the past week there has been some concern over a TV advert by Wonga. The issue escalated to such an extent that the advertising watchdog ruled that it “confused the public about the interest rates that applied”.

The commercial featured a conversation between two puppets about the costs of a Wonga short-term loan. The Advertising Standards Authority stated that the advert was “misleading by implying a representative APR of 5853% was irrelevant”.

My issue here is not Wonga……They pray on the vulnerable or desperate and we should expect their adverts to do exactly that……which they do.

My issue is that it took an advertising regulator rather than a financial regulator to stop this……and that was only due to complaints. Why is this not being picked up before it even gets to TV airing? All promotional material from a business card to a TV advertisement has to meet strict regulator criteria in the financial world……surely an APR of 5853% that is being promoted as ‘irrelevant’ would cause some concern with somebody? Surely?

I can’t make a company conform to my moral compass but I should expect it to confirm to a regulatory one?

Silly me……I expected better.

Cautious Optimism Definitely Maybe

George Osborne was given a significant boost yesterday after the International Monetary Fund (independent and impartial – we can trust them) retreated from its previous criticism of the UK’s austerity policies and predicted the UK will grow faster than any other ‘rich’ economy this year.

 

To avoid confusion……‘rich’ is described as the Group of 7 (G7). This is a group consisting of the seven advanced economies……Canada, France, Germany, Italy, Japan, UK and USA. Now, to ensure that there is no confusion between G7 and G8……G8 is the G7 plus Russia. Get it?

 

Anyway, the big deal is that the G7 countries account for around 40% of all money / growth made in the world. And for dramatic effect……that’s 40% from just 7 countries.

 

The IMF’s bi-annual analysis is looking pretty good……an upbeat forecast for the world economy generally and for the UK in particular. Given that it previously predicted growth for the UK at 1.5%, the latest prediction of 2.9% for 2014 is another substantial upgrade to the IMF's assessment of the UK outlook.

 

Lots to be confident about looking forward……we just need the growth figures to be ‘actual’ rather than ‘predicted’ and we will have some substance to support the confidence.

 

I’ll leave the last word to the politicians given that the General Election is just 12 months away……

 

In the blue corner……Chancellor George ‘Gorgeous’ Osborne hailed it as "proof that the economic plan is working".

 

In the red corner…… Shadow Chancellor Ed ‘Grow Some’ Balls accused the government of "complacently trying to claim that everything is going well".

 

Regardless, the IMF says there is plenty to be confident about……so I’m feeling confident. So there!