Roll up, roll up come and see the great balancing act!

I hope this finds you well and enjoying what is now official summertime, with rain, rain and rain here this week for us in the Midlands. 

Shops, pubs, restaurants and hairdressers all open seems to be good news.

With the Summertime spending plan laid out yesterday what can be seen from this is that this has cost us £190 billion so far.  

This is more than our national income tax bill last year to put that into context.

Seeing as the “eat out to help out” and other schemes have been well reported, I wanted to pick on two points.

I watched the whole speech live and the second point jumped out straight away.

There is no stamp duty for any property purchase up to £500,000 until 31/03/2021. This includes second homes and buy to let.

This is a massive boost for the property investor world seeing as buying additional property does carry additional stamp duty (3% extra).

To my mind this could see more property investors come back to market that have been put off by costs. This “could” drive this sector forward a little quicker and people that where minded of not moving due to costs might just now take the plunge.

The other point was what was said, and I quote:

“We will produce a Budget and Spending review in the Autumn. And we will deal too with the challenges facing our public finances. Over the medium-term we must, and we will put our public finances back on a sustainable footing”.

This means we know this is going to cost us money, but we will address this further on down the line once we know how to do it.

You may well recall a few updates back I mentioned longer term higher tax. Low inflation and low interest rates with higher unemployment do not warrant higher taxes yet, but these will come in one form or another.

So, why is this now all a balancing act?

The UK is now approaching its point of a potential second wave with more services open and people moving more freely. The scenes from London last weekend just go to show the common sense that Boris is relying upon to move us forward for some is missing.

The closure of a hospital in London recently and the local lock down of Leicester shows that this virus has not just gone away.

Markets are still pricing for a second wave and with continued increases in cases in the US and with new cases in China, Germany, Australia and South Korea continue to spook recovery.

This is all about balancing health and wellbeing vs healthy finances and it’s not a job I would want right now.

We know we need shops and the hospitality sector open as the chancellor said yesterday our economy is based upon consumption.

Looking toward the developed market economic data it seems that the UK has been affected the worst out of all of these.

We did expect to see a step back before we push on again and as you may recall a few updates back I spoke about a “W” shaped recovery and the fears of the second wave.

However, with volatility comes opportunity and fund managers like to see some volatility as it creates buying opportunities overall. In a flat rising market (a straight line up) there is little room to extract profit.

So, we do welcome normal market conditions with some periods of volatility appearing. Stay invested and stay with the course seeing as being invested is the best way back out.

What we have seen is a bumper Quarter 2 of growth and performance in the markets and this has seen a great deal of recovery in valuations across the board. I must stress this is really good news.

At times good news is hard to find but it’s there if we look hard enough.

Job losses will continue as businesses look to reduce the work force to match demand. Until such time we do have free movement and confidence returns this will not change.

What concerns me more is the valuation of businesses and property being depressed then overseas buyers snapping up potential bargains.

With businesses needing cash flow this might be an outcome that I feel would be a bad move. Be this sovereign Middle Eastern, US Private Equity or the Chinese they all want a foot in the UK. This gives them all buying power now more than ever.

As you know by now, please feel free to contact me if you do have any questions on any of your financial matters or just want a catch up.

Best wishes,