The sooner the Conservative leadership race is concluded, the better. 

In the current economic climate, the last thing the UK needs is a caretaker Prime Minister managing the shop, and with no authority to take decisions on the pressing issues of the day, most notably the continuing cost of living and energy crisis.

We now know that the new PM will not take office until after September 5^th – seven weeks of further delay UK consumers and businesses can ill afford.

In the United States, there is always a lot of emphasis placed on the ‘First 100 Days’ of a new President’s term in office, but whoever the new PM is in the UK will also have to hit the ground running and ensure that a robust economic plan is ready to be implemented as quickly as possible. 

This may even necessitate an emergency Budget, sooner than the planned Budget scheduled for November.

Looking at the wider global picture, since my last newsletter, the markets have largely stabilised. We must remain watchful regarding inflationary pressures, but I am hopeful that we are nearing the peak globally. There also continue to be supply issues which have not been fully resolved.

The sell-off of pretty much anything other than so-called ‘old school’ stocks such as utilities and banks has ended and there is now a more balanced economic picture.

Interestingly, the S&P 500 Index in the United States has just endured its worst six months on record, but a closer look at its performance over the last 12 months shows a 3% uplift – something most investors would be comfortable with.

So, while there is reason for cautious optimism, the continuing uncertainties in the UK and worldwide reinforce the importance of having a long-term, well-balanced and, crucially, diversified portfolio, something that is integral to the advice and services provided to our clients.

Best Wishes to Laura

We would like to take this opportunity to send our best wishes to our paraplanner colleague Laura Rees who is temporarily leaving us to have a baby. 

We are also delighted that our new administrator Chris Archer is settling in well and getting to know our clients.

Finally, as we bask in a rare UK heatwave, on behalf of everyone at Phillip Bates & Co Financial Services, I would like to wish you all a lovely summer.

It has been an interesting few days for followers of the cryptocurrency market with panic selling as the market took a battering.

At one point, the Bitcoin digital currency had fallen below $26,000 from a peak of more than $69,000. Meanwhile, the Terra [LUNA] cryptocurrency fell by more than 99%, wiping out the fortunes of many crypto investors.

Terra, which was ranked among the ten most valuable cryptocurrencies, dropped below $1 at one stage last week, having peaked close to $120 in the previous month.

Although we are not permitted to recommend cryptocurrencies to our clients, it is something we are often asked about. 

We prefer to focus on the real economy where stocks may be overvalued but are never worthless – unlike the world of cryptocurrency.

We are delighted to announce that Helen Brown has been included in a prestigious guide of the UK’s top financial advisers.

Helen, a Chartered Financial Planner at Phillip Bates & Co Financial Services, features in the newly published ‘VouchedFor’s 2022 Top Rated Financial Adviser Guide’, produced in conjunction with The Times newspaper.

Helen was one of the top performing advisers to make it into the list with 142 positive reviews from her clients. She has been included in the guide every year it has been published since 2014.

All advisers must undergo extensive checks prior to listing and be authorised by the Financial Conduct Authority.

Alex Whitson, Managing Director of VouchedFor, said in his foreword to the guide: “Uncertainty. It’s a word that has featured heavily in our past four guides. Whether due to Brexit, Covid or, now, the awful crisis in Ukraine. 

“Unsurprisingly, such difficult times increase the value people place on good advice.”

Helen, who has been with Phillip Bates & Co Financial Services, for over 12 years, said: “I am delighted to have been included in the VouchedFor guide again this year. The guide gives people the confidence that they can trust the advice of the advisers who are included.

“As the guide says, this is even more important when we are living through such uncertain times.

“As ever, I am hugely grateful to all the clients who have given me reviews for the advice I have given them during the last 12 months.”

Helen works mainly with pensions and investments and has a long-standing specialism in “at retirement” work. This is a crucial part of financial planning as it involves arranging income for retirement in the most effective way for the individual.

Alan Mellor, Managing Director of Phillip Bates & Co Financial Services, said: “Helen is an outstanding Chartered Financial Planner who goes the extra mile for her clients. This is evident from the enormous number of reviews that she receives each year.

“She is part of a team that is committed to providing our clients with long-term, diversified plans that will enable them to achieve their financial objectives.”

Helen is one of three Chartered Financial Planners at Phillip Bates & Co Financial Services along with Alan Mellor and Margo Dorozik.

The Chancellor’s Spring Statement did not make for easy listening last week.

Rishi Sunak’s announcements on the raising of the National Insurance threshold by £3,000 and the 5p a litre cut in fuel duty were welcome.

Likewise, the promise that he would reduce the basic rate of income tax from 20p to 19p in 2024 struck a positive note, albeit a rather political one.

However, the small amount of wriggle room that the Chancellor has for giveaways to help ease the growing cost of living crisis was overshadowed by the ever-deepening concerns surrounding the rising rate of inflation.

Currently standing at 6.2%, the Office for Budget Responsibility (OBR) is now forecasting that inflation will average 7.4% this year.

Alongside this, the OBR is suggesting that while the economy will grow by 3.8% this year, GDP will only grow by 1.8%, 2.1% and 1.8% over the following three years.

Further concern came with the news that debt service costs would rise to £83bn in the next fiscal year, the highest level on record.

When it comes to the issue of inflation, there is very little the Chancellor can do to resolve this directly.

We are in the midst of a global supply chain crisis the like of which we have not seen for decades.

There is an expectation in some quarters that after the 2008 global recession and the Covid-19 pandemic that governments will keep throwing money at the problems, but this is simply unsustainable.

The reality is that the various economic challenges, led by the rising inflationary pressures, mean that the financial markets will remain volatile in the short to medium term.

They are recalibrating and trying to work out what the economic headwinds mean for the value of businesses.

Volatility does, of course, also provide opportunities where stocks are mispriced.

While we continue to monitor what is going on in the UK and global financial markets, and advise you accordingly, our focus remains steadfast in ensuring that our clients’ portfolios have a longer term, diversified and balanced approach.

Waking up to reports this morning of an assault on Ukraine, one’s first thoughts are with potential loss of life and liberty and, sadly, how this may affect the rest of the world.

There was an absolute inevitability that markets would fall sharply first thing. This is the result of uncertainty, more sellers than buyers, resulting in markets falling to find a new balance.

At the time of writing, the fall is in the region of 2%, but this could change as events unfold further. 

The reality for clients is that markets go up and markets go down. We will see a resurgence and return of values, although the timescale of this is an unknown.

As we have seen during the last couple of years of the pandemic, previous financial crises and the Iraq wars, patience has been key.

Some other impacts specific to this issue are oil and gas prices rising further, although I would expect central governments to take some steps to limit this. 

Gold is already spiking and as a store of value it is useful at times of crisis. Government bonds may benefit from equity valuation volatility. 

Similarly, over the slightly longer term of the coming weeks or months, the increasing central government input of funds and liquidity has historically supported markets.

All this analysis reinforces why a sensible, well diversified, global approach to investments is best placed to cushion some of the immediate impacts of events in Ukraine.

We remain confident that this is the sensible and correct approach and do not think short-term reaction to events is necessary.

We will, of course, continue to track events closely as they unfold and will ensure to update clients as appropriate.