The announcement on Wednesday that the UK economy is now officially in recession has come as no surprise, with the news in the first half of 2020 dominated naturally enough by Covid. The financial news has been mainly centred around its effects, from the dramatic collapse – and equally dramatic recovery – of the market – to Chancellor Sunak’s exciting minibudget designed to get the economy rolling again.
But there have actually been some financial developments that could be important, even if they have been overshadowed.
The international scene
The trade dispute between the US and China is not going away.
Donald Trump has been sending very mixed messages during the course of his presidency. Early in his tenure, he visited Beijing, where he met with Chinese leader Xi Jinping and praised the “very good chemistry” the two men shared. The following year, however, he launched a trade war against China, while simultaneously holding out for an historic deal between the two countries.
Throughout the trade war, Trump has frequently promised a deal that would open China up to American companies and rebalance the relationship in a way that benefits US farmers and workers. He described it as “righting the wrongs of the past and delivering a future of economic justice and security for American workers, farmers, and families.”
With the recent ban on 5G equipment from Chinese telecoms giant Huawei, that deal looks even further away. The Sino-American relationship has been a decisive driver of globalisation in the last few years. The latest developments seem set to turn back the clock – and put question marks over many aspects of global trade.
The non-Covid related financial news at home has been rather less dramatic. There has been a ban on using credit cards for gambling, video games now need to provide warnings if they offer to include in-game purchases. Perhaps more importantly, there has been some action from the banks on overdrafts.
The rules around overdrafts changed back at the start of 2018. Banks had to text a warning to customers about fees before charging them for using their unarranged overdrafts to give those customers an opportunity to take action. Metro Bank Nationwide, HSBC and Santander have all had to make refunds for failing to provide the necessary warnings. You may be due a small windfall if you bank with them.
The latest round of negotiations between the EU and the UK has seen both sides citing “significant differences” once again. Brussels claimed it was still working “constructively” but suggested that Britain’s top negotiator David Frost had failed to make the necessary concessions. The UK team see the concessions being demanded as impossible to deliver.
With an unsettled international situation, Brexit and the aftereffects of Covid, the next few months could challenge your current financial arrangements. A downturn might be short and recovery may possibly come quickly, but it still makes sense to ensure that your own finances are prepared.
We can help you take a fresh look at your financial arrangements now, but our service does not stop there.
Continuum lifestyle financial planning means building a long-term relationship, with regular reviews. We work to ensure that whenever you need help to look at your circumstances, someone you already know and trust will be there to provide it.
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 Financial Conduct Authority does not regulate personal finance.
The value of investments can fall as well as rise and you may get back less than you invested.
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