The UK government borrowed and spent hundreds of billions during the pandemic but now suddenly we’re broke and can’t borrow more. Of course, if the government did borrow more the pound would sink even lower against the USD and our credit rating would drop again. The London Stock Market has lost its position as the top market in Europe. We can assume that this time the government isn’t crying wolf and we really are in a financially dire situation. Why has the world lost confidence in the UK? The main reason can be summed up in one word, Kwarteng! That will be a word that will forever more will be associated with crashing the pound and the economy. The other reason for our dire situation is that covid was managed badly. Boris went into hospitals and caught covid and then went to rugby matches to spread it to all parts of the UK. He also brought us out of Europe, our biggest export market. Now we are in such a mess they are ignoring renowned economists and asking George Osborne for advice. He was the idiot who gave us years of austerity after the 2008 crash and trashed the NHS. You couldn’t make this up, it looks like they either trashed the economy on purpose or don’t have a clue what they’re doing.
People, who know what they are doing?
The people who do know what they’re doing are running our banks, energy companies and our industry. I don’t mean the people at the top paying themselves million-pound bonuses. I mean those people that the chancellor has just increased their taxes on top of rising energy bills and mortgages. The people cancelling next year’s holiday.
Those of us who invest to get that little bit of investment income are watching the market and wondering what to invest in next. I’ve switched from growth stocks to defensives but things still look a bit dire. Today I get a small dividend from Taylor Wimpey but their future doesn’t look too rosy with interest rates still rising. I’m watching pharmaceuticals that earn in USD while the pound is so low. The pound is at $1.19 now and slowly rising. I’m expecting banks to do well with rising interest rates and Lloyds Banking Group is undervalued. Standard Chartered does a lot of business in Asia and things are getting back to normal in Hong Kong. Rolls-Royce might be worth a punt now that air travel is growing and the government is favouring nuclear power stations again. Reckitt Benckiser Group Plc is considered defensive and is currently strongly favoured by analysts. I don’t see it as giving good returns but it is a good one to have in a recession.
I don’t have any great ideas for making or saving money this week. I am trying to save energy but my smart meter gives showing it is getting more and more expensive as the weather gets colder. My energy account is still in credit and there is enough cash to pay for my heating until April. I’m paying a high amount on the direct debit so I’m covered. I might even get a refund in the Spring because they might have overestimated it.
I’m planning to have guests at Christmas as usual. I haven’t had a family party since 2019 so I can splash out on some luxury now. Christmas dinner will be roast duck with a few glasses of pinot noir! My discretionary income might fall for a while but I’ll adjust to that easily. We can avoid buying overpriced junk and junk food and that will save us a lot of money. I cooked myself a turkey dinner last week which is nicer than a happy meal and costs less even if you include the wine! Don’t let the rising cost of living panic you. be thrifty and frugal then save and invest. Then you can enjoy your money.