Getting back on track with your finances

With almost six months of economic disruption since the crisis broke in March, those costs may be substantial.

Some of us have been fortunate enough to get through the crisis relatively unscathed, actually saving money by swapping the long commute to the office to a short stroll to the spare bedroom. For others there have been lost jobs, pay cuts and anxiety.

We all need to look at getting our finances back on track. At Continuum we will be looking at the effects of the crisis, and how we can help you get over them – and in this article we will be providing an overview.

So what happens now?

There is worry about a second Covid-19 wave. There is still no vaccine, people are still falling ill – and every time there is mention of a new hotspot, the markets begin to look nervous again.

But despite the worries, as the Covid crisis has demonstrated, the one thing you can be confident about when you predict the future is that you may be wrong.

Nobody saw the crisis coming or the market crash that followed – or the boost in both the stockmarket and the property market as we came out of it.

It could certainly be that the economy is on the up. Although it contracted by around 20% in the second quarter of the year, the collapse was concentrated in a brief period between March and early May. Since then, it has been recovering and is likely to have expanded by at least 15% in the current quarter.

The reasons for this recovery may be due to a number of factors, and government intervention has helped. Once the scale of the crisis became obvious, the Treasury and Bank of England did as much as they could to mitigate the impact.

In the first four months of 2020, the government has built up a budget deficit of £150bn.

But even though prediction may be unwise, it is certain that what happens next will be crucial, as government loans and furlough payments are wound down. The effects might be felt in three key markets, all of which could affect your finances.

The housing market

Nationwide’s property index suggests that the average British house price has hit a fresh record high and at £224,123 is now up £8,000 on where it was in February.

The lockdown mini-boom after the property market was frozen for spring has been given an extra boost by the stamp duty holiday.

Mortgage approvals more than doubled in July. The Nationwide building society reported the biggest monthly increase in house prices in 16 years in August. It could be that this positive growth will continue.

See how at Continuum we can help you cut the cost of your mortgage if you are ready to make a move – saving you money whatever happens to the housing market

The jobs market

The end of furlough means that many people will be left without work. Their employers have been depending on support with their wage bills, and treasury-backed loans. As these dry up, there may be a number of business failures, and the unemployment figures may head upwards.

Chancellor Mr. Sunak has announced a £2bn kickstart job creation programme for 16 to 24 year-olds, and sought to get the economy running through cuts in VAT and his eat out to help out scheme. This may have helped stimulate a feelgood factor. The Monday to Wednesday takings for the restaurants that have taken part in eat out to help out are well up on last year.

Whether this will be enough to keep the domestic economy buoyant remains to be seen.

The financial markets

As we have seen, the markets have already rallied from the low points in March. Those who held their nerve have seen their holdings recover considerably while those who dumped holdings in panic lost out.

Investing can be a tense business at the best of times. Investing when the markets are volatile dials up the tension. With Brexit as well as the Covid hangover to consider, there could be some more tense times ahead.

Find out how at Continuum we can help you arrange an investment strategy based around your own financial circumstances.

Getting some expert help

Watch out for our detailed articles on getting your property, savings, pensions and investment plans ready for recovery.

But there is no need to wait. A call to us now can give you individual support from an advisor who will work to help you get all your finances back on track – whatever the future holds.

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 and you may get back less than you invested.

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

The Financial Conduct Authority does not regulate taxation advice.

Source:

https://www.theguardian.com/commentisfree/2020/sep/03/britain-economy-coronavirus-decline