A hundred years on Hugh Pym looks at First World War parallels with the 2008 crisis

With interest Enable notice that Hugh Pym Chief economics correspondent for BBC News has been exploring  the parallels between the 2008 crisis and the fear that gripped the city in August 1914.  Before a single shot had been fired there were he reports - queues in the City, banks raising cash in a hurry from the authorities and a rush to obtain gold – which really does sound more  like September and October 2008 than one might have imagined, back in 1914 the markets were gripped by fears of the end resulting in war.

The story which has not been talked about much in the 100 years since the outbreak of World War One is now being addressed by Hugh and makes for some interesting historical financial reading.

Even the former Bank of England Governor Mervyn, now Lord, King said at the height of the 2008 banking crisis that it was the worst since August 1914. An expert on economic history, King liked to point out that there was nothing comparable in the 1930s which many saw as the obvious parallel to the financial implosion triggered by the collapse of Lehman Brothers.

One hundred years on, the Bank of England has opened up its archives for 1914 for public viewing. The fascinating episode in economic history is set out in the ledgers kept in the vault where the authorities' massive intervention propped up the financial system and kept it afloat as Britain went to war. Perhaps Mervyn King and his colleagues consulted the archives to see how their predecessors dealt with the banking crisis of 1914 suggests Pym to find out more from Hugh Pym you can go to how close WW1 came to bankrupting Britain.

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Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
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Family Mortgages set for some changes

Our Independent Financial Advisors at Enable know that thinking of starting a family is also one of the triggers for taking out a mortgage and getting your own home as well as one of the most common reasons for moving up the housing ladder – but some tougher new mortgage rules are looking as if they may make this harder and harder to do.

From the end of April all borrowers will be have  to pass a range of extra affordability checks and anyone who already has high childcare costs could see their applications refused or scaled back dramatically.  Some mortgage insiders are beginning to predict a bit of a crisis where parents with young children could see the amount they can borrow reduced to almost half the amounts child-free applicants can borrow.

The Mortgage Market Review being brought in by regulator the Financial Conduct Authority is driving these changes. ‘This has been worked out with the best of intentions, but until it beds down it could bring a lot of unintended consequences,’ said one leading mortgage broker.

There is also some continuing confusion over how to treat maternity pay for mortgage or re-mortgage applicants which must be even more unsettling for new and prospective parents. And while the long-term intention of the changes is to ensure that everyone has a mortgage they can realistically afford, the best advice is to be ready for a difficult transition period this spring when every lender is expected to re-examine its application process before the new Financial Conduct Authority rules comes in. Enable is always keen to make sure any mortgage meets the needs of the householders especially if they have a family.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Issued by: Enable Independent Financial Life Planners
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Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
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Interest rate worries continue with unemployment falling……

At Enable our IFA’s can see that many are concerned about the possible rise of interest rates that were promised with the falling of unemployment.. But will the Bank really raise rates?  One thing to bear in mind is that despite falling unemployment it would seem that No 10’s figures do not include the self-employed, the big fall in joblessness seen last week, which the Government hailed as evidence of its economic success, was in fact driven a lot by people becoming self-employed.  About 40 per cent of the rise in employment since the worst points in 2009 has come from people being self-employed. So figures that do not include an estimate of their earnings do not give a full picture.

Many economists agree however that even if the Government is being optimistic, wages are closing the gap with the cost of living and it is quite possible that in the latter half of this year pay rises will beat inflation. Unfortunately that does not mean we are all going to be better off as that promised interest a rate rise might come sooner than expected.  It is worth taking note of economist and former Monetary Policy Committee member Andrew Sentance who argues that we need to start raising rates this year, though very slowly.

The difference being argued about over how much better or worse off we might be is a few hundred pounds a year but that can make a real difference in many households.  Even if we do not expect one this year, we should prepare for when it finally comes.  Enable IFA’s can help you get your finances in the best shape for your household.

Issued by: Enable Independent Financial Life Planners
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Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
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Academic excellence in Finance...

Being so close to Cambridge, Enables IFA’s appreciate the excellence in all disciplines that emanates from our academic institutions. Like Cambridge Endowment for Research in Finance(CERF), founded in 2006 by Cambridge Finance that aims to secure a research community of the highest international standard and reputation by bringing together the various research centres in finance with in the University of Cambridge Drawing  leading experts in finance and international law together and covering topics across the financial landscape from regulation and the macroeconomics of markets, asset allocation and risk management, derivative pricing, econometrics, microstructure modelling, liquidity and interaction effects, to  finance law. They hold international conferences, regular seminars and weekly workshops, all designed to facilitate the sharing of knowledge and promote cross-discipline working.  In addition, they have offered an annual award for the best student paper in finance each year since 2007.

Last week the Cambridge Finance Seminar welcomed Dr Maria Bustamante LSE.                         

Product Market Competition and Industry Returns ABSTRACT. This paper documents that product market competition has two opposing effects on asset returns. We find that firms in more competitive industries have less valuable growth options and thus lower loadings on systematic risk. We also find that these firms have lower profit margins which make them more exposed to systematic shocks. The first effect dominates the second, so that firms in more competitive industries earn lower asset returns on average. Our empirical findings are robust to using five alternative empirical measures of competition, and to controlling for the sample selection bias of publicly listed firms.

The full paper can be downloaded here

Isa 6% interest for your kids...

Looking our for our children financially is something Independent Financial Advisors at Enable are constantly supporting their clients with.  Remember again almost a year ago Halifax injected a dose of competition into the kids' tax-free savings market and has since established itself as a leading provider of Junior Cash ISAs (JISA).   The account presented a fresh challenge to the market by boosting its variable rate to an unrivalled 6% AER when the person with parental responsibility for the child also has their own ISA with Halifax. This ‘relationship rate’, is still offered by Halifax, and is acknowledged as a significant factor of the account’s success.

The majority of Halifax JISA customers benefit from the 6% rate and it has retained a consistent ‘Best Buy’ status since launch as a result.  "Our Junior Cash ISAs is a clear demonstration that there is the opportunity for innovation in children’s savings. It encourages a positive savings habit from an early age and allows children to learn that habit from their parents when they save tax free with us too.” Says Richard Fearon, head of Halifax savings. Those that take advantage of the current £3,600 annual limit, at the 6% rate, from birth to the age of 18, would have a tax free savings pot of £117,936* when the product matures into an adult ISA. This is £31,115 more than an account paying 3% AER.

By age group, 0-3 year olds make up the greatest proportion of Halifax’s JISA customers, accounting for over a third (36%) of all accounts that have opened in the last 12 months. 13-15 year olds are the second largest group (29%), while 10-12 year olds are the third largest (19%) group of account holders. This age group split is explained partly by the fact those born between 1 September 2002 and 2 January 2011 are not eligible for JISAs. If you want to make your money work as hard as it can for your kids Enable’s IFA’s in Bishops Stortford can help you find your way.


Issued by: Enable Independent Financial Life Planners
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Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
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Counting your blessings in the January gloom

Enables IFA’s in Bishops Stortford like so many others are glad to be the other side of Blue Monday. It is time to look for good news - the International Monetary Fund (IMF) has increased its growth forecast for the UK economy significantly , now expecting the economy to grow 2.4% this year - faster than any other major European economy - against its previous forecast of 1.9%. In 2015, it expects growth of 2.2%.  The IMF has also raised its global growth outlook slightly to 3.7%.

 With an economy that appears to be making it’s way out of the woods, against a global picture that is so much improved maybe January is a time to take stock and count our blessings.  Maybe  remembering the Autumn statement, focusing on the investor-friendly measures you can benefit from–remember the chancellor abolished stamp duty on exchange traded funds (ETFs),  to encourage more ETFs to list in the UK rather than rival financial centres. It benefits retail investors, who now avoid the charge on the purchase of UK-domiciled products and the measure goes some way to improve the status of passive funds following the Retail Distribution Review, where they lost some of their historic cost advantages over active funds.

There was also the inflationary rise in the cash Isa allowance for the new tax year from £5,760 to £5,940 while the stocks and shares Isa allowance will increase by £360 to £11,880. The Junior Isa allowance will increase by £120 to £3,840 in April 2014. Maybe time to start thinking how to take small steps to help your finances feel more buoyant in the coming year. Our Independent Financial Advisors at Enable in Bishops Stortford are happy to help you count your financial blessings this January.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
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Latest UK job news...

Good news on the jobs front this month, as the Job Vacancies Index rose to a level not seen since 1998.

 This index compiled by Markit and sponsored by the Recruitment and Employment Confederation uses data supplied by 400 recruitment companies. It shows a sustained growth in UK job vacancies

Most encouraging was the demand seen for engineers, nursing and care staff and other medical positions. One of the sponsors of the report, Bernard Brown, Partner and Head of Business Services at the consultants KPMG, said of these findings: “Six months ago – after almost five years of pain – most employers were wondering just how real the signs of recovery were.

“Business certainly seems to be more confident.”

Paradoxically, given the current high unemployment rate, the availability of suitable candidates to fill this increasing number of vacancies fell. This is a trend that appears to be continuing.

On this point, Mr Brown, went on to add: “It may be that people are still worried about job security but it is more likely that we are seeing a return of the traditional winter slowdown in recruitment as staff are more focused on Christmas than careers.”

Meanwhile, the Office for National Statistics (ONS) reported in mid-December that UK unemployment now stands at 7.4% representing 2.39 million people and that there were 562,000 job vacancies available. The Governor of the Bank of England has stated that he will not contemplate raising interest rates from their historically low level of 0.5%, until the country’s unemployment figure drops below the 7% level.


Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
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“Warp speed” to be avoided in housing market

The Governor of the Bank of England (BoE), Mark Carney, has warned of a “potential” housing price bubble here in the UK.

In December, speaking at the Economic Club of New York, he was quoted as saying: “There is a history in the housing market of moving from stall speed to warp speed… we want to avoid that.”

He intimated that the BoE would intervene and tighten the lending requirements to this sector if they believed such a risk was evolving.

They have already acted on this premise by removing house purchase loans from their Funding for Lending Scheme, which will inevitably have the effect of restraining the housing market to some extent.

The Government’s independent budgetary watchdog The Office for Budget Responsibility has forecast that house prices will rise by 5.2% in 2014 and by 7.2% in 2015.

These fears were echoed by the Royal Institution of Chartered Surveyors (Rics), as their recent research has revealed more surveyors are expecting price rises than at any time in the last 14 years.

Simon Rubinsohn, the Chief Economist of Rics, said: “It’s no secret that the housing market is on the way up and prices are surging ahead in many parts of the country.”

He went on to add: “The improvement in wholesale and retail funding markets may mean the impact on mortgages is relatively limited.”

However, at the same time the Council of Mortgage Lenders (CML) was less pessimistic of a bubble forming, as they believe an unbridled property boom was unlikely and furthermore, borrowing for house purchases would continue to increase throughout 2014.

Their Chief Economist, Bob Pannell was also optimistic, stating that: “We think there are good grounds to be optimistic that the majority of households will cope with a slow but certain transition to more normal interest rates.” As mentioned elsewhere, he was referring to the BoE’s.

Governor confirming that he will not consider raising interest rates generally until the UK unemployment rate hits 7%, and maybe not even then. When they do indeed raise interest rates, this will have the effect of making mortgages more expensive and putting a brake on house prices.


Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
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Markets: (Data compiled by The Outsourced Marketing Department)

The US Fed’s announcement in mid-December, that it is to finally ‘taper’ its quantitative easing programme by $10 billion a month, paradoxically had a very bullish effect on the global equity risk markets.

With all eyes on the Dow Jones Index; it rose 3.05% to 16,576.66, an all-time high. To put this in perspective the index has now risen by 26% in the year.
Meanwhile, the Nasdaq soared in 2013, gaining a massive 40% over the year and closing up 2.87% in the month at 4,176.59.

Taking its lead from the prospects of a strengthening US economy, here in the UK the FTSE100 gained 1.48% to close at 6,749.1. That represents an annual gain of 14.43%, whilst the wider FTSE250 closed at 15,935.35 for a rise of 3.03% in the month and 28.77% for the year.Elsewhere in Europe, the Euro Stoxx50 improved by just 0.54% in December to close out the year at 3,109.0 but recorded an annual gain of 17.95%.

The Japanese market, however, won the gold medal, seeing a massive improvement of 56.72% over the year to finish December at 16,291.31.

With all the attention on the equity markets, the foreign exchange markets had a quiet month. Sterling continued to improve again against the US greenback, finishing the year at $1.66, up 1.84% in 2013. Against the Euro it closed December at €1.21, flat on the month, but down 1.63% from a year earlier. The Euro itself improved against the US Dollar, ending the year at $1.37. Gold bullion had a bad year, losing 27.19%, and closed out 2013 at $1,220.22 an ounce.

Oil, having had a volatile year, dipping to as low as $99.95 during 2013, finished at $111.21 a barrel as measured by the Brent Crude benchmark, flat on the year.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
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Inflation dips to four-year low Further encouraging news on the economy was announced in mid December

UK inflation measured by the Consumer Prices Index (CPI) fell to 2.1% in November, down from the previously reported 2.2%. This is a four-year low and brings the core inflation rate (excluding food and energy) to below 2%.

 The Office for National Statistics (ONS), who compile the data, cites lower food, transport, and utility prices as the major factor in this decline. However, they warned that recently announced increases in energy prices have not yet filtered through the system and therefore they will impact the next set of inflation figures, relating to December, adversely.

At the same time the wider Retail Prices Index (RPI) growth was unchanged at 2.6%. These lower figures will be welcomed by most consumers, as inflation has been a problem for them with annual weekly wage increases only averaging 0.9% recently and therefore creating a squeeze on family budgets. Meanwhile the Governor of the Bank of England (BoE), Mark Carney, was also pleased, as he has avowed to meet the inflation target of 2%, set by the Government, even though the figure has been above this level since November 2009.Good progress has been made though, given that the CPI figure was above 5% just two years ago.

The historically low interest rates of 0.5% are a cornerstone of the BoE’s policy and Dr Carney has stated that he will not increase these until the UK’s
unemployment rate dips below 7%; it is currently at 7.4% for the previous August-October quarter. If, however, inflation continues to remain subdued, he will be able to maintain these low interest rates beyond that time, helping businesses and consumers alike.

Property prices are not helping him here though, with the ONS reporting a 5.5% increase in UK house values since October 2012.

Issued by: Enable Independent Financial Life Planners
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Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
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A fiscally neutral Autumn Statement

The Chancellor of the Exchequer, George Osborne, delivered a fiscally neutral Autumn Statement in December. Government borrowing has been reduced to £111bn in 2013 and he forecast that it will drop progressively to only £23bn by the tax year 2017-18.

Net Government debt has been reduced to 6.8% of GDP in 2013 and could fall to zero by the 2018-19 tax year, meeting their ambition to return the economy to a surplus.

The Chancellor confirmed that the UK was “growing faster than any other developed economy”, with the Office for Budget Responsibility forecasting GDP growth of 1.4% in 2013, 2.4% in 2014 and then 2.7% in 2018.

Overall welfare spending will be capped and Job Centre Plus will compel those on Jobseeker’s Allowance aged between 18- 21 years to train in basic English and Maths.

University places will be increased by 30,000 in 2014 and the student numbers cap will be abolished the following year. £150 million will be made available for updating and building school kitchens, while all primary school children in Reception, Year 1, and Year 2, will receive free school meals.

The Chancellor extended Business Rate relief for small firms out to 2015 and limited any future increases to 2%. Employers’ National Insurance contributions will be abolished for those employees under the age of 21, from April 2015.

Married couples and those in a civil partnership, where neither is a higher rate tax payer, will be able to transfer £1,000 of income to their partner to reduce their joint income tax by approximately £200.

Green Levies will be rolled-back, contributing to a reduction of £50 in the average consumer’s energy bill.

The planned fuel duty escalator rise for 2014 will be cancelled and the paper-based road excise duty ‘tax disc’ will be replaced with an electronic version, although the tax will still be payable.

The state pension will not be affected by any cap on the overall welfare system, as the existing ‘triple-lock’ will guarantee year-on-year rises. Next April’s rise for those on the maximum Those currently younger than 40 will have to wait longer to take their state pension, with the retirement age being raised to 68 in the 2030’s and to 69 in the 2040’s. £9bn is hoped to be raised by closing down aggressive tax avoidance schemes over the next 5 years and Capital Gains

Tax will now be payable on the sale of UK residential property belonging to non-resident owners, as from April 2015.

The bank levy will be increased to 0.156%, raising £2.7bn for the Treasury in 2014.

Issued by: Enable Independent Financial Life Planners
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Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE