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Investment Notes

Follow our regular updates to stay up-to-date with current financial planning and investment issues. We regularly publish press clippings, articles and thinkpieces that we think might be of interest to our clients.

Over the last ten quarters to March 2013, the UK economy has produced essentially zero growth due to a combination of (i) the UK government’s austerity plans encompassing both spending cuts and tax increases, (ii) severe economic weakness in the Eurozone, the UK’s largest trading partner, (iii) weakness in North Sea oil production due to essential maintenance work, (iv) a large bank

The starkest lesson that should be taken from the Cyprus crisis from all in the eurozone is that no bank deposit is guaranteed. It is always ultimately a loan from the depositor to the bank with the possibility that your government may mitigate any loss. Depositors with more than €100,000 in local Greek, Portugese, Spanish and Italian banks should now be giving serious consideration to moving their money to stronger banks in safer countries, as also might those with less than €100,000.

For the last quarter of a century, Germany has been open to monetary union with the rest of Europe, provided that three conditions were satisfied.

In the 1970s, the British comedian, Spike Milligan devised the Q series. This was a surreal comedy show, which when any particular sketch had come to an end without a suitable punchline, the actors would then wander around saying “What are we going to do now?” UK economic policy seems to have reached the “What are we going to do now?” stage.

Recent data have shown that in 2012, China overtook the USA to become the world’s most important trading nation. On the basis of aggregating total imports and total exports, China’s total international trade amounted to $3.87 trillion, and that of the US was $3.82 trillion.

Over the ten complete quarters that the current UK government has been in power, economic growth has been minus 3%, but total employment has risen by 1%. For the last calendar year, the data show the size of the economy as unchanged but total employment up by over 550,000 or about 1.6%.

All three of the major credit rating agencies, Standard & Poor’s, Moody’s and Fitch, have the UK rated at AAA but with a negative outlook. A fourth, Dagong, a Chinese-owned rating agency, already has the UK at only A+, four notches below AAA.

Germany, the powerhouse economy of the Eurozone, recently announced 2012 GDP growth of only 0.5%, and that it expected 2013 to deliver only 0.4% growth. At a time when most of rest of the Eurozone is undergoing policies of austerity and reductions in private sector wage costs, they are looking to Germany to be the source of demand for their goods and services, which their own economies are currently unable to provide.

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