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The UK 'A game of two halves' |
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11 January 2010 |
Justin Urquhart Stewart is one of the most recognisable and trusted market commentators on television, radio, and in the press. Originally trained as a lawyer, he has observed the retail market industry for 20 years whilst at Barclays Stockbrokers and developed a unique understanding of the market's roles and benefits for the private investor.
Justin Urquhart Stewart is one of the most recognisable and trusted market commentators on television, radio, and in the press. Originally trained as a lawyer, he has observed the retail market industry for 20 years whilst at Barclays Stockbrokers and developed a unique understanding of the market's roles and benefits for the private investor. Justin provides financial advice to clients of Kester Cunningham John Financial Planning LLP.
Before the snow set in, there was a brief moment of economic enthusiasm (but certainly nothing that could be considered anything near euphoria). This was a result of the retailers rushing out their sales estimates for the run up to Christmas. Spending was apparently better and therefore everyone was encouraged, and then with some industrial production figures in the UK showing some improvement, suddenly there was a brief flush of optimism.
However, within twenty four hours the snows set in again and the blanket of financial worries returned to cover the economy with a pall of gloom. In just a single day sentiment turned, with forward retail sentiment turning down and the consumer confidence figures coming out showing greater weakness and nervousness on the part of spenders. These concerns primarily related to the increasing cost of taxation both directly by way of National Insurance and Income Tax, and indirectly with the rise in VAT back to 17.5%. Not surprising really - especially given the dour commentaries from all the politicians who seem to have started practising their party lines for their forthcoming hustings.
For the UK, I wonder if our markets may be the inverse of what happened last year. Just twelve months ago we were just recovering from the fright of near Armageddon and the first few months were nervous and torrid; yet following an evaluation of all the government economic stimulation around the world and the S&P 500 reaching a satanic nadir of 666, everything turned around. From there we had a wonderful market and economic recovery (albeit the UK has yet to prove that it has turned positive). This year I wonder if we will see a potential reverse when optimism is shaken by some aftershocks and our investment markets lurch 'down again in 10'. This year we will hope and plan for the best but be prepared for the worst.
The recovery from last Spring should come as little surprise given the amount of cash pumped in to stimulate the economy. Investors have been seeking anything that may give some improvement from the meagre deposit rates |
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