Our economic review is intended to provide background to recent developments in investment
markets as well as to give an indication of how some key issues could impact in the future.
It is not intended that individual investment decisions should be taken based on this information; we are
always ready to discuss your individual requirements. We hope you will find this review to be of interest.

IMF cuts growth forecast!

The International Monetary Fund (IMF) has warned that economic damage from the Ukraine conflict will contribute to a significant slowdown in the global economy with the UK set to be amongst the hardest hit.
In its latest assessment of world economic prospects, the IMF said the war in Ukraine is driving up fuel and food prices and that this will hit future growth prospects.
Global growth is now predicted to slow from an estimated 6.1% last year to 3.6% in both 2022 and 2023, 0.8 and 0.2 percentage points lower, respectively, than the organisation’s previous forecast published in January.
For the UK, the international soothsayer now predicts growth of 3.7% this year, down from January’s 4.7% prediction.
In 2023, the UK is forecast to have the slowest growth rate among the G7 advanced economies at just 1.2%, almost half the level of the previous forecast.
The IMF said this downgrade reflected elevated inflationary pressures and tighter monetary policy, along with the UK’s ongoing labour supply issues.
Meanwhile, the latest growth figures released by the Office for National Statistics (ONS) revealed a larger than expected slowdown in February, with the UK economy expanding by just 0.1%. This was significantly below January’s figure of 0.8% and lower than the consensus forecast in a Reuters poll of economists which predicted growth of 0.3%. ONS said the slowdown partly reflected a decline in manufacturing, with car production sharply down due to component shortages, and falls in computer
goods and chemical products.
Survey data also points to a more recent cooling in the pace of UK output.
The preliminary headline reading of the S&P Global/CIPS Composite Purchasing Managers’ Index dropped to a three month low of 57.6 in April, down from 60.9 in March, as high inflation and the Ukraine conflict weighed on service sector sentiment. http://sheldonflandersfinancialservices.co.uk/our-monthly-economic-review/

Our economic review is intended to provide background to recent developments in investment
markets as well as to give an indication of how some key issues could impact in the future.
It is not intended that individual investment decisions should be taken based on this information; we are
always ready to discuss your individual requirements. We hope you will find this review to be of interest.

BANK RATES RAISED AGAIN!!

Last month, the Bank of England (BoE)
sanctioned a further increase in its
benchmark interest rate as inflation
continues to surge significantly ahead
of the Bank’s target level.
Following a meeting held in mid-
March, the BoE’s nine-member Monetary
Policy Committee (MPC) voted by
an 8-1 majority to raise Bank Rate from
0.5% to 0.75%. This was the third meeting
in a row that the MPC had signalled
a tightening of monetary policy, taking
the Bank’s main interest rate back to its
pre-pandemic level.
Policymakers cited a strong labour
market and continuing signs of ‘robust
domestic cost and price pressures’ as
key reasons for the hike. Minutes to the
meeting also noted that Russia’s invasion
of Ukraine had led to ‘further large
increases in energy and other commodity
prices including food prices.’ As a result,
the BoE now expects inflation to reach
‘around 8% in April,’ almost a full percentage
point higher than it forecast in February
and four times its 2% target figure.
While the minutes did say that ‘some
further modest tightening in monetary
policy may be appropriate in the coming
months’ they also pointed to concerns
about the outlook for growth as
households struggle with a squeeze on
incomes. Indeed, analysts noted a more
dovish tone than was evident in the
previous set of minutes, with a distinct
softening of the language on the need
for future rate hikes.
Data subsequently released by the
Office for National Statistics (ONS), however,
showed that price rises continue to
exceed analysts’ expectations. In the 12
months to February, the rate of inflation
as measured by the Consumer Prices
Index, surged to a 30-year high of 6.2%.
This was significantly up on the previous
month’s rate of 5.5%, and 0.3% higher
than the median forecast in a Reuters
poll of economists.SFFS Economic Review_Mar 22

On the 23rd March 2022, on the 2nd anniversary of the Covid lockdown, Chancellor Rishi Sunak delivered his spring statement, beginning
by paying tribute to soldiers in the Ukrainian army.
The chancellor says the UK has a “moral responsibility” to use its “economic strength” to help Ukraine, including through economic and humanitarian aid, as well as sanctions against Russia.
But Sunak warns the actions taken against Russia are not cost-free.

Delivering the statement, the Chancellor made clear that the sanctions against Russia will not be cost-free for people at home, and that Putin’s invasion presents a risk to our economic recovery – as it does to countries all around
the world.
A summary follows:
spring 2022

Great expectations for the year ahead!

Given the challenges of the past two years SFFS Simply Wealth_Winter 22we could be forgiven for focusing on life’s trials and tribulations as a new year dawns. However, while concerns about supply chain disruption, new COVID variants and rising inflation may be disconcerting for investors, all the signs are that the coming 12 months will be a time of opportunity as well as risk, as we move towards a postpandemic future. Recovery continues In its final 2021 assessment of economic prospects, the International Monetary Fund (IMF) predicted a continuation of the global recovery in 2022, with the world economy forecast to grow by 4.9% this year. The international soothsayer did, however, acknowledge that the degree of uncertainty surrounding future prospects has risen with policy choices becoming more difficult and increasingly complex. Inflation-proof your wealth In particular, concerns surrounding global supply chain issues and rising inflation have created a policy dilemma for central banks. These twin concerns have also heightened the need for investors to employ careful and considered strategic thinking in order to reposition their portfolios to take advantage of new growth opportunities while ensuring their wealth is inflation proofed. Beware investment scams Although the spectre of rising inflation is expected to see central banks tighten monetary policy as the year progresses, deposit-based savings rates are forecast to remain at historically low levels. Such meagre returns have prompted many savers to shift their money into investments, with research1 suggesting over half of all adults have done so. This move though has raised concerns that unrealistically high return expectations could leave some investors susceptible to investment scams. Advice remains key While the coming year is sure to present ongoing challenges for investors, the key to successful investing will remain the adoption of a carefully considered strategy based on sound financial planning principles. Attractive investment opportunities are likely to present as 2022 unfolds and, with our help and careful repositioning of your portfolio, you should be able to make the most of these as and when they arise

Our economic review is intended to provide background to recent developments in investment markets as well as to give an indication of how some key issues could impact in the future. It is not intended that individual investment decisions should be taken based on this information; we are always ready to discuss your individual requirements. We hope you will find this review to be of interest.

Interest rates rise again!

Last month, the Bank of England’s Monetary Policy Committee (MPC) signalled an increase in its main interest rate for the second meeting in a row as the Bank continues to grapple with a rapid rise in the cost of living. At its latest meeting held in early February, the MPC sanctioned a quarter of a percentage point rate rise taking Bank Rate to 0.5%. In what was a surprise split decision, however, four of the nine-member committee voted for a larger hike, seeking to raise rates by half a percentage point. The decision to increase rates is designed to contain the country’s spiralling rate of inflation, which the Bank now expects to peak at around 7.25% in April. This would represent the fastest rate of consumer price growth since 1991 and would leave inflation significantly above the Bank’s 2% target level. Data subsequently released by the Office for National Statistics (ONS) showed that inflation, as measured by the Consumer Prices Index, rose to 5.5% in the 12 months to January, putting the cost of living at a near 30-year high. This figure was above most predictions in a Reuters poll of economists, with the consensus suggesting the rate would hold steady at the previous month’s level of 5.4%. The latest inflation statistics appear to have reinforced the chances of a third consecutive rate rise at the conclusion of the MPC’s next meeting on 17 March. The minutes from February’s meeting acknowledged that the Bank expects ‘further modest tightening in monetary policy’ to be appropriate ‘in the coming months’ and, according to a Reuters poll, most economists now predict a quarter percentage point rise in March. Furthermore, almost half of respondents also forecast a similar hike at May’s meeting. SFFS Economic Review_Feb 22