UK ECONOMY EXPANDS 0.5% IN Q3

Recent data from the Office for National Statistics (ONS) estimates that the UK economy expanded by 0.5% in Q3 2016. Although slower than the 0.7% growth rate experienced in the second quarter, this was stronger growth than many analysts estimated, reducing expectations of an interest rate cut at the Bank of England’s next Monetary Policy Committee meeting on 3 November.

The ONS commented: “The pattern of growth continues to be broadly unaffected following the EU referendum. There is little evidence of a pronounced effect in the immediate aftermath of the vote.”

Philip Hammond, the Chancellor of the Exchequer, was reported to comment that the GDP figures demonstrated the resilience of the UK economy, adding: “We are moving into a period of negotiations with the EU and we are determined to get the very best deals for households and businesses.

“The economy will need to adjust to a new relationship with the EU, but we are well-placed to deal with the challenges and take advantage of the opportunities ahead.”

The economy was supported by a robust performance from the services sector, which grew by 0.8% between July and September. The strongest part of the service sector was transport, storage and communication, growing 2.2% in the period; the fastest rate for seven years.

Service sector growth was offset by the steepest fall in construction since Q3 2012, with the industry dropping 1.4% between July and September following a sharp slowdown in new housebuilding. Manufacturing output contracted by 1%, while production and agriculture declined by 0.4% and 0.7% respectively.

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.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

UNEMPLOYMENT CONTINUES TO FALL

In the three months to end June, according to the latest figures from the Office for National Statistics (ONS), unemployment in the UK fell by 132,000 to 2.08 million.

This represents a rate of 6.4% in the quarter, which is the lowest level recorded since 2008 – a near six-year low. Those people claiming the Jobseeker’s Allowance also fell for the 21st consecutive month, dropping by 33,600 to 1.01 million.

More importantly, the number of young people, those aged between 16-24 years old, also dropped by 102,000 to 767,000. This is a decline of 200,000 from the same period last year and represents the biggest fall since records began in 1992.

Interestingly, 40% of the increase in employment overall came from people who were not born in the UK. Whilst the number of people employed and born in the UK, rose by 502,000. 326,000 people not born in the UK enhanced those figures.

Many of these 326,000 came from what are known as the A8 countries, those from the former Soviet bloc; states such as Hungary, Lithuania, and Poland, who represent the newer members of the EU since 2004.

Commenting on these latest encouraging figures Iain Duncan Smith, the Work and Pensions Secretary said: “In the past, many people in our society were written off and trapped in unemployment and welfare dependency. “But through our welfare reforms, we are helping people to break that
cycle and get back into work.”

Good as this news is, average wage growth remains stunted. The ONS recorded that average wages, excluding bonuses, rose by only 0.6% in the year to June, registering the slowest increase since records began in 2001. Even worse, including bonuses, wages actually fell 0.2%. There is an argument here that employees are accepting nominal wage increases under the fear of losing their jobs and not wishing to ‘rock the boat’.

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.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

UK INFLATION DIPS TO 1.6%

More encouraging news came from the Office for National Statistics (ONS) in mid August, as they announced that the Consumer Prices Index (CPI) had dropped to 1.6% in July from the 1.9% recorded in the previous month. This continues the trend of below 2% inflation throughout 2014, much to the pleasur e of the Bank of England (BoE).

The ONS cited a fall in the price of clothing, probably as a result of retailers extending their sales period to attract consumers, and both non-alcoholic and alcoholic drinks, particularly spirits and New
World wines. There was also a reported drop in the prices of financial services, with some major banks dropping their overdraft rates. Food sales also saw a price fall overall. Food is now 0.4% cheaper than in the same month last year including syrups, jam, sugar, chocolate and confectionery.

Finally, petrol and diesel fuel also saw a decline in price. Currently the average price of a litre of petrol is £1.31, against a price of £1.35 seen at the same time last year.

Whilst good news for the economy, it is not such good news for savers, as they will now need to find a home for their non-ISA savings paying at least 2% (or 2.67% for higher-rate tax payers) to counter the effects of both tax and inflation on their savings.

Meanwhile, the wider Retail Prices Index (RPI) remained static at 2.5%. This is a more closely followed statistic, as many other prices are measured against it, including train fares. The Government has stated that the train operating companies can increase next year’s prices by the RPI rate calculated in July of each year, plus an average of 1%, with flexibility within that for some fares to rise a further 2%. Therefore, some commuters could see their tickets rise by up to 5.5%; well above
the current inflation rate.

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.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Using Trusts to control your assets

Enable of Bishop’s Stortford’s independent financial advisors can see that with people living longer, and with many more having more complex family structures, as people often divorce, remarry  and sometimes have second families at older and older points in their lives, there is a place for Trusts in wealth management that is not all about tax avoidance.

The ONS figures for England and Wales in 2012 showed the biggest increase in the number of marriages was for men and women aged 65 - 69, rising 25 per cent and 21 per cent, respectively.

Trusts can be a vital tool for modern families, in helping to cope with children from different relationships, step-children and age-gap relationships and for making sure the right people receive money at the right point in their lives.

HMRC's own Research Report 25 says that tax is usually a secondary consideration in using a trust:

"The main motivation for setting up a trust appears to be related to control of assets, rather than tax planning as found in both the in-depth interviews and the survey of trustees.  While tax planning is important for some, it is usually cited second."

But HMRC's proposed extension of the Disclosure of Tax Avoidance Schemes (Dotas) rules could impact mainstream family situations. This new regime requires 'scheme promoters' to notify HMRC of a new scheme, which is then allocated a scheme reference number (SRN) which needs to be declared in their tax return. This information-gathering exercise is intended to be an alert system to HMRC, so any perceived abuse of the tax rules can be reviewed and action taken if required.

The consultation closes on 23 October. It's possible new rules could be in force for April 2015, but the timescale isn't clear yet. The gap between perception and reality can be large when trusts are viewed as a "tax avoidance scheme" lens, rather than as an everyday reality for further advice Enable’s IFA’s in Bishop’s Stortford are here to help.





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.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE