Market in turmoil - salvation or ruin ?

This 'correction' was very predictable...

• Europe's inability to co-ordinate action across such a diverse landscape - with different fiscal objectives. Germany & France certainly could have helped more (for once I agree with Gordon Brown !).
• The political russian roulette in the US between the Democrats & Republicans - particularly the inflexible zealout Tea party.
• The lack of growth in the developed world, & the increasing tendency for some time now, to consume, on the never, never.

What's next ?

Its a very difficult trade off - take on austerity like the UK & risk growth and potentially risk recession - more job losses & an even greater slump.

My judgement - treat the economy like your own business - if your a debt junkie, the only way to recover is to wean off the dependency & clean up your act.

The coalition have this called right - they started early & despite the pain & the drop in living standards, we have increased confidence around UK Sovereign debt & now have a better rating than USA !!

This road is long & bumpy. Expect more equity weakness, interest rates will have to stay low for longer than the BoE would like, risking more infltionary pressure.

One bit of advice - avoid equities in the short term, & also beware of the tendency to put off the difficult things & if necessary print more money. As Dennis Healey proved in the 1970's  - it's the road to ruin.


Jason Oakley MBA DipFS ACIB CeRGI CeCM
Acorn to Oaks Financial Services Ltd

Northern Rock - on the block

Government announces plan to sell Northern Rock

The government has announced that it is putting up Northern Rock for sale at a price of £1 billion.

In his Mansion House speech in London, chancellor George Osborne said that the government was ideally looking for a single buyer to take over the bank.

By opting for a single buyer, the government is likely to make more money than it would with a multitude of buyers.

The chancellor said: "The independent advice I have received is that a sale process is likely to generate substantially the best value for the taxpayer and should be explored as a first option."

The bank, which was split into two, will not be sold as it originally was.

One half, known as the "good bank", which contains about 70 branches and the savings of customers, is the bank to be sold.

The other half, known as the "bad bank", will continue to be owned by the government until its bad debts are reduced.

The chancellor also outlined plans to ring-fence banks in order to separate their retail operations from their investment banking options.

In doing so, a tax bailout on such a scale as the one announced in response to the financial meltdown of 2008 would be averted in the future.

If you would like to discuss how we can assist you further please contact us on Tel: 0800 068 0041 or email me: jason@a2ofs.co.uk

 

Jason Oakley MBA DipFS ACIB CeRGI CeCM

Managing Director

 

What's happening to the Banks

I have a number of SME clients, who have seen their trading come under some pressure. Most manage their costs very closely, day to day, so are taking action to align their costs to this new, quite hostile environment. However, it pains me to admit, as an Ex Head of Business Banking for RBS & Natwest - most Banks have a very risk averse attitude, their over-riding priority is security cover.

My clients have complained about inexperienced Relationship Managers, often who have not experienced an economic downturn before, speaking to them in very dismissive terms. Interest rates are increased & fees are added for basic things. A client recently had to pay £500 for personal guarantees to be signed.

Are you happy with your Bank ? Do you need a more sympathetic ear, who is looking to help you grow your business ? Have you considered non traditional forms of finance, that align with your cash-flows and growth plans ?

Acorn to Oaks can help - we have access to over 60 lenders, as a member of NACFB (National Association of Commercial Financial Brokers). We are happy to engage with you & look for solutions, WITHOUT upfront fees.

For a no obligation discussion, ring me FREE on 0800 068 0041.


Jason Oakley MBA DipFS ACIB CeRGI CeCM
Managing Director