UK borrowing overshoots target

The Chancellor’s deficit reduction policy has again come under pressure with news that the budget deficit for the financial year to March stood at £74bn, £17.7bn less than the previous year, but £1.8bn more than the Office for Budget Responsibility’s (OBR) forecast of £72.2bn for 2015- 16. However, commentators believe that in macro-economic terms this is a fairly modest overshoot and means that the OBR forecast could yet be vindicated.

George Osborne had pledged to return the UK economy to surplus by 2020, with the OBR forecast stating that the UK could be running a budget surplus of £10.4bn in 2019-20 and £11bn the following year. However, the Chancellor has since revised down his forecasts in a move designed to shrink the deficit more slowly, and reduce the need to introduce yet more austerity measures. In the most recent forecast, the OBR expects the deficit to be £55.5bn in 2016-17, £38.8bn in 2017-18, falling to £21.4bn in 2018-19.

Reporting on income and expenditure, the ONS said that the government received £636.2bn in income for the financial year to March, an increase of 4% on 2015. Over the same period the government spent £696.2bn, roughly in line with the previous year. Two thirds of this figure goes to central government departments, the remaining third is accounted for by expenditure on social benefits including pensions, unemployment benefit, child benefit and maternity pay, together with capital investment and the interest payments due on the government’s outstanding debt.

With weaker than expected growth from tax receipts contributing to the borrowing target overshoot, HMRC has announced that it has plans to pursue tax avoiders more assiduously in the coming year. It remains to be seen if these measures, together with the planned savings to the welfare budget, will enable the Chancellor to meet this year’s target.

Issued by: Enable Independent Financial Life Planners • 
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MARKETS: (DATA COMPILED BY THE OUTSOURCED MARKETING DEPARTMENT)

Following the IMF downgrade for global growth, equity markets were relatively unmoved as growth expectations had already been marked down. Most economists had previously downgraded their forecasts in response to weaker growth in both the US and Japan, combined with ongoing concerns over the emerging markets, uncertainty over the EU Referendum and commodity prices. As commodity prices firmed up and business surveys picked up, the outlook brightened somewhat. With growth and inflation continuing to disappoint, central banks are under increasing pressure to add further stimulus.

 In the UK, the FTSE100 gained 235.4 points or 3.8% to the month’s high of 6410.30 (20 April), losing ground in the latter days of the month to finish April at 6241.90, a modest month-on-month rise of 1.1%. The wider FTSE250 lost 0.7% over April, to close the month at 16,801.60. The junior AIM gained 2.4% over the month to close on 727.70.

Across the pond, the Dow Jones index gained a mediocre 0.5% during April to close the month on 17,773.64. The NASDAQ, heavily influenced by technology stocks, fared worse losing 94.49 points to 4775.36 a fall of 1.9%. On 28 April, Fed officials voted to leave monetary policy on hold, opting not to guide towards an imminent hike in interest rates. Their statement reflected a slight improvement in the economic outlook as they removed the reference to global developments continuing to pose risks.

On the continent, the Eurostoxx50 experienced a three month high of 3151.69 (21 April), however ended the month gaining just 23.28 points to 3028.21, an advance of 0.8%. In Japan, where government debt continues to rise and the budget deficit remains high, the Nikkei225 index lost 0.6% to 16,666.05. In a surprise move, on 27 April the Bank of Japan chose not to increase stimulus efforts against market expectations.

In currency markets, the US dollar finished the month at $1.45 against sterling and the euro closed at €1.27 versus sterling. Oil had a good month, Brent crude ended April up 17.5% to $47.39 a barrel. Gold also experienced positivity with the metal rising +4.9%, to close at $1,292.87 a troy ounce.

Issued by: Enable Independent Financial Life Planners • 
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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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IMF cuts UK annual growth forecast

The International Monetary Fund (IMF) has cut its forecast for UK annual growth from 2.2% to 1.9%, citing the ‘uncertainty’ posed by the EU Referendum. In 2015, Britain’s economy expanded by 2.3%, with economists expecting that growth would slow this year and
in subsequent years, a view shared by the IMF who have kept their forecast of 2.2% growth in 2017 unchanged.

 The IMF believes that ‘A British exit from the European Union could pose major challenges for both the UK and the rest of Europe. Negotiations on post-exit arrangements would likely be protracted, resulting in an extended period of heightened uncertainty that could weigh heavily on confidence and investment, all the while increasing financial market volatility’.

The Prime Minister, not surprisingly, supports this view commenting, “The IMF is right – leaving the EU would pose major risks for the UK economy. We are stronger, safer and better off in the European Union.” However, those campaigning for Britain to leave the EU have rejected the views held by the IMF and have accused it of downgrading the UK’s forecast at the request of the Chancellor, George Osborne. They also point out that IMF forecasts for the UK have often proved wrong in the past.

Those advocating the UK’s exit from the EU believe that remaining in an unreformed EU poses even bigger risks. They argue that fundamental problems with the European banking system and the euro remain unsolved, as does the current migration crisis.

The UK isn’t the only economy to see its forecasts cut by the IMF. The US forecast has been reduced from 2.6% to 2.4%, with the global growth figure scaled back from 3.4 % to 3.2%.

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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Q1 2016 - UK economic growth slows...

The Office for National Statistics (ONS) reported that between January and March 2016 Gross Domestic Product (GDP) grew by 0.4% in-line with economists’ expectations, down from 0.6% in Q4 2015. This marks the 13th consecutive quarter of positive growth for the UK.

The ONS report that this slowing of economic growth in Q1, was partly due to a sharp fall in construction output, falling 0.9% during the first three months of 2016. Industrial output also dragged, falling 0.4% during the period, as did agriculture by 0.1%. The ONS said there was no evidence to substantiate a ‘Brexit effect ‘on GDP. The government’s decision to hold the EU referendum was not taken until late February. Business groups cite the impact of weaker global trade and New Year financial market turbulence as more likely explanations for the tail off in growth.

The service sector, the largest part of the economy which accounts for more than three quarters of GDP, continues to perform well, growing 0.6% in Q1, compensating for falls in output in the other three parts of the economy. Joe Grice, Chief Economist at the ONS, commented, “Today’s figures suggest growth has slowed as compared with the pace up to the middle of last year. Services continue to underpin the economy but other sectors have shown falling output this quarter.”
Ruth Miller, economist at Capital Economics, said of the slowdown in growth, “Many of the factors likely to blame for the first quarter’s weakness should prove short-lived. We would not be surprised if growth were to subsequently accelerate in the second half of the year, putting the economy back on track.”

The IMF recently downgraded its global growth forecast and unlike the ONS, refer to Brexit ambiguity as a contributing factor.

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

Making a Will

Enable’s IFAs in Bishop’s Stortford know how much time some put into making sure their loved ones will be financially provided for should anything happen to them.  If you really want to be sure your wishes will be met after you die it is vitally important that you make a will.

A will is the only way to make sure your savings and possessions go to the people and causes that you care about. It is also the best way of avoiding disputes between relatives some disputes over wills can cause arguments among family members and may even need a solicitor to resolve them. Leaving a will should remove any doubt about who you want to leave your estate to.

It can be very hard to talk to your loved ones about death yet many of us want to make sure our families will be provided for. Making a will and talking about it can save everyone a lot of worry. Deciding who you want to leave your possessions to (your beneficiaries) can help you make sure they go to the people you intended. It can also ensure that assets are kept within the family and are passed on down the generations. Many people are concerned that new spouses or second families will inherit their assets in the future, and a well-structured will can help to prevent this. Making sure you have planned for Inheritance Tax can also be thought through.

Your will can also be the best way to let people know what you want for your funeral, whether you would prefer to be buried or cremated, taking some of the stress away from the family at such times.

Source : Age UK

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

Building long term wealth

Enable’s experienced IFA’s in Bishops Stortford know that owning a property especially one that is your home has been one of the sure-fire ways to build long-term wealth in recent years. Recent date from website Zoopla indicate that there are currently more than 600,000 property millionaires in Britain. “A price tag that was once the exclusive preserve of stately homes or mansions is now an increasingly common label for modest houses.’ Says Lawrence Hall, of Zoopla.

So how do you make sure passing on your property is tax efficient? Capital gains tax is not an issue for owners of properties they live in.  But it is inheritance tax levied at 40 per cent that can take the edge off property wealth for the next generation. Recent figures from the Office for National Statistics indicate that inheritance tax charged in the last tax year totalled £4.6 billion. Inheritance tax is currently charged at 40 per cent on the values of estates above £325,000, although for married couples and civil partners, they effectively have an allowance of £650,000 because they can pass on their assets and possessions to each other tax-free.

From next year however a ‘transferable main residence’ inheritance tax allowance will be introduced. It is being phased in gradually; starting at £100,000 from April 2017, rising by £25,000 each year till it reaches £175,000 in 2020. By 2020, this will effectively raise the inheritance tax threshold to £1million for married couples who leave their home to children or grandchildren. To make sure your wealth is not eroded by inheritance tax some astute financial planning can help Enable’s IFAs are here to help.

Source: Tax Efficient Review


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

Redefining retirement

If you are part of the younger generations the idea that retirement starts at 65, and will be a time of financial security and adventure might need reviewing. If you’re not retiring in the next decade your old age might look decidedly different says Alistair McQueen, retirement expert at insurer Aviva. He says younger generations need to take heed of the Turner Report, which suggests they will have to save more, work longer and retire with less money.  

He also said that retirement has changed dramatically since the days before the state pension, and even since the state pension was introduced. ‘Before the 1900s, retirement used to be a time of poverty.’ ‘Then when the welfare state was introduced in the 1940s, you had five years or so in retirement, and it came to be seen as a rest period. ‘Then people began to live longer and retirement was seen as a reward now, since retirement has lasted 10 or 15 years it has become a right that people get to enjoy a great time of adventure, freedom and leisure.’ McQueen thinks the current retirees are an ‘abnormality’.

The main difference between current retirees and future retirees is the demise of defined benefit (DB) pensions, also known as final salary pensions. DB pensions are workplace pensions that pay out a percentage of final salary multiplied by the number of years worked. These pensions have been replaced by defined contribution (DC) pensions which are far less generous.  On the whole, those saving into a DC pension would have to save far more than those saving into DB pensions in order to get the same income in retirement. If you are looking to put aside more for longer, Enable’s IFAs can try and help you make the right choices for your own personal situation.

Source: New Model Advisor   

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