Are we set for the roaring twenties?

History does tend to repeat itself.

A century ago, the Roaring Twenties (also known as the Jazz Age) was a decade of economic prosperity and cultural change. It was characterised by a mood of optimism and new social, political, and cultural opportunities.

The rise of new technologies played a major role in reshaping culture and powering rapid economic growth, with a booming stock market and an increase in consumer spending. 

The economic success of the 1920s sounds like something we could do with repeating now and there may be a glimmer of hope that we could.

The covid pandemic brought the economy to a standstill. A century ago the global Spanish flu epidemic did the same – but the recovery then stimulated new growth. The legacy of Covid may be an economy stimulated by teleworking efficiencies and medical advances. 

ONS data shows the economy has been broadly flat since early 2022, growing by 0.1% in each of the second and fourth quarters and contracting by 0.1% in the third quarter. The economy remains smaller than it was in late 2019 before the onset of the Covid-19 pandemic, although by 0.6% rather than the 0.8% previously estimated.

But things could be picking up.

Things are looking better in the short term

The Office for National Statistics confirmed that the economy narrowly avoided being in technical recession – two successive quarters of negative growth – in the second half of 2022.

Despite fears that high inflation, strikes and financial turmoil would lead to falling output, builders, manufacturers and the telecoms sector all recorded faster growth than forecast, and the economic outlook is suddenly looking better than expected. The Institute of Directors said there had been an improvement in demand, confidence, hiring and investment in March. Britain’s businesses have reported a spring surge in order books, boosting hopes that the economy may finally be recovering after flirting with recession late last year.

In the 1920s, it was electricity, radio and the motor car which stimulated growth.  Innovation and new technologies such as robotics, AI and nanotechnology could do the same for the 2020s.

Things are looking better in the medium term

The world is focused on the havoc being wrought by higher interest rates and worries about the financial system. But behind the scenes, there could be developments that will help shape a more prosperous future. A free trade agreement between the U.S. and the United Kingdom is now a real possibility.

The UK has already struck biggest trade deal since Brexit to join a major free trade bloc in Indo-Pacific, when the Prime Minister announced a deal to join CPTPP – a huge trade bloc in the Indo-Pacific which will now have a total GDP of £11 trillion.  The Indo-Pacific region has 60% of the world’s population and is set to account for the majority (54%) of global economic growth and around half of the world’s billion middle-class consumers in the decades ahead.

World trade grew by 82.5% in the 8 years from 1921 to 1929, thanks in part to improved communications. The internet is making international trade simpler still.

There are also trade deals with Australia, New Zealand and Japan, with more in the pipeline.

There may even be signs that relations with Europe are less frosty than they have been in recent years.

Things looking better in the longer term too

The UK’s long-term economic growth could outpace leading EU countries like Germany, France and Italy. Developing successful trade and investment links with faster-growing emerging economies is seen as essential to achieving this growth – and exactly what the current Prime Minister and his team are planning on doing.

What should you do?

The roaring 20s took the world by surprise, but those who were open to new ideas were able to build their wealth by judicious investment.

At Continuum we believe in caution when it comes to your money – but we also know how important it is to have an investment strategy that can take advantage of economic growth when it comes.

Roaring 2020s or simply business as usual, it pays to be prepared with an investment strategy designed around your needs.

To discuss the options, which may potentially be suitable to improving your wealth in the future, contact us today.

The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.

The value of investments can fall as well as rise due to fluctuations in global investment markets, Capital is at risk, Investors may get back a less than the original amount invested.

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