As our more astute readers might have noticed, your friendly Editor here at IFA Magazine is rather partial to using a song title or two, when it comes to this column.
This month is no different. In fact, this song from David Bowie and Queen (both firm favourites of mine) back in 1981 (yes, really!!) came whizzing straight to my mind. I think it sums up the state of play just now rather succinctly. Now, I should add that I’m definitely not screaming ‘let me out’. And it’s nothing to do with the tax year-end, which is always such a busy time for the financial advice profession. Nor indeed is it to do with Chancellor Hunt’s first Spring Budget – in which he managed to pull a surprise rabbit or two out of the pension hat as we highlight on pages 34-37.
Another one bites the dust
It’s just that the economic events and news of banking stresses of the past few months have been causing some noticeable unease and ripples of concern across the globe and in the investment world too. As we’ve tried to highlight on pages 24-27 how and why the latest economic news – including the banking stresses kicked off by the collapse of Silicon Valley Bank in the US has really been in the spotlight. That’s been especially so for Central Banks as they try to meet their inflationary targets in the midst of recent turmoil in the banking sector. Indeed, some have been (somewhat unhelpfully) comparing the current situation to the build up of the great financial crash (GFC) back in 2007-2009. Thankfully whilst it is clear that banks are more strongly capitalised now than back then, the risk of contagion based on trust being undermined is always a threat, particularly to some of the smaller banks in the US.
So, despite the banking stresses, for the 11th meeting in a row, the Bank of England’s MPC decided to hike UK rates in March with its focus firmly on bringing down inflation. In the US and the EU, a similarly sharp escalation of rates has occurred in the fight against the rising cost of living. Such a rapid rise in the cost of finance after so many years of low rates is bound to take its toll and pressures will begin to emerge as we’ve seen only too well with the SVB situation. It’s a complicated situation and one which deserves vigilance from us all, as it seems likely to be set to impact in different ways in the months ahead.
Keep yourself alive
In the meantime, as you turn the pages, there’s plenty of material in this latest edition of IFA Magazine which we hope will get you thinking.
And of course, once you’ve recovered from the excess workload which the tax year-end always brings, it remains for us to wish all our readers a well-deserved, happy and relaxing Easter break. It’s a hard life after all!!
Editor, IFA Magazine