Firstly, my apologies for not updating you with any insight over recent weeks, but to be honest the reason for this has been because investment markets seem to be following the path which I have discussed previously and as the economy is in something of a malaise, with strikes and a struggling healthcare system, trying to make a fist of anything hasn’t been straightforward lately.
What you may find of interest (and which isn’t being publicised to any great degree) is the fact that the UK FTSE100 company share index is now within 1% of it’s all-time highest level, which was back in mid-2018, so things are recovering well in this area of investment and this hopefully reflects the resilience of our larger companies, albeit testing times are still ahead!
Whilst the issues we have looked at previously are now being laid bare, namely the rising cost of energy, the cost of living and the impact of high inflation and also now, the concern about future job losses, which tends to go hand in hand with a recession, such as we have now entered, there may be some room for cautious optimism from an investment perspective.
So where does this take us? Well we are starting to see inflation falling back, with suggestions that it may be at a sharper rate than previously predicted (I always thought that this may prove to be the case and have probably bored a few of you by rattling on so much about it!) and, as such the Bank of England has adjusted its predictions for where the base interest rate may peak, which is around the 4% mark by mid-2023, as opposed to the Summer 2022 prediction which suggested it may peak at above 6%; so this is good news and hopefully a theme which will factor back into investment sectors in a positive way, such as we are seeing so far this year (early days I know, but I’m an optimist!). What I do expect to see though, is an increase in job losses within the private (and possibly public) sector, as companies wrestle with high energy and production costs, coupled to increased salary demands from their employees, so expect service standards to fall off (if it could ever get any worse in some businesses!) as companies look to reorganise their structures in order to make them ‘fitter and leaner’ going forward.
In terms of where analysts’ and fund managers see 2023, there is something of a mixed view, given the concerns about a global recession and it’s prolonged impact on economies, but the consensus view seems to be that most sectors should start to progress, if not that rapidly during 2023 then certainly through 2024; time will tell of course!
I noticed last week that gas wholesale prices have dropped significantly from their 2022 high in recent weeks, with the attached BBC article reflecting what this means in terms of household costs going forward (spoiler alert: it’s not as good as it sounds, but will help the government in terms of their subsidy costs, albeit the impending price cap increase will mean that we are unlikely to feel any real benefit for a while!).
Hopefully investments will progress along the same path as they have started 2023 and we can at last start to see some recovery and progression, after what has been a very unpleasant couple of years both within investment markets and moreover our daily lives and those of others around the globe.