Sadly, the market news for April continues to be pessimistic as economies around the world continue to grapple with the impact of Covid-19. The good news is that some of the short-term volatility seen in March has calmed. However, when looking ahead for the next few months and beyond, there’s still a lot of uncertainty.
With countries in Europe and further afield in lockdown for much of April, it shouldn’t come as a surprise that recession fears continue. The World Trade Organisation suggests world trade could shrink by up to 30% in 2020, a bigger drop than the one that followed the banking crisis in 2008. The International Monetary Fund has also warned the world faces the greatest recession since the 1930s. The organisation now expects the global economy to shrink by 3% in 2020, rather than the 3.3% growth predicted at the beginning of the year.
As of the end of April, governments are looking at ways to begin lifting lockdown measures in many countries. How countries respond in the following weeks could give a better indication of what’s to come for the rest of 2020.
The headline figures from the UK highlight how many businesses are struggling to continue operations amid the lockdown restrictions.
Figures from the Office for National Statistics revealed that one in four firms have temporarily closed amid the coronavirus pandemic. Of those firms still operating, many are using the government scheme to furlough staff, with the government paying up to 80% of wages. The scheme has now been extended to October.
In a bid to support businesses getting back on their feet once restrictions are lifted, Chancellor Rishi Sunak unveiled the Bounce Back Loan Scheme, which will help SMEs borrow between £2,000 and £50,000. The government will guarantee 100% of the loan.
The UK composite PMI slumped to just 12.9 in April, down from 36 in March. Anything below 50 indicates a contraction and the latest figure is worse than even pessimistic forecasts expected. Other readings show:
- UK factories cut jobs at their fastest pace since 2009 after both output and new orders fell, according to Markit
- Construction activity fell at its steepest pace since 2009, with an IHS Markit reading of 39.3 in March, down from 46
With the travel sector among the hardest hit, airlines have been lobbying the government. There has been growing pressure to bail out Virgin Atlantic, and Airbus and Rolls-Royce are among those calling for greater support.
As the vast majority of shops are shut, retail is another sector that’s suffering due to the restrictions. According to Springboard, UK retail footfall fell sharply by over 80% in the last week of March. Focussing on individual companies, Debenhams, which has been struggling for some time, filed for administration. Well-known high street brands Oasis and Warehouse also collapsed into administration in April.
The picture across Europe is broadly similar to that in the UK, with businesses struggling and fears of a deep recession growing.
Germany, often seen as the stalwart of the continent, is expected to see GDP shrink by 9.8% in the second quarter. This would be the biggest decline since records began in 1970. With this in mind, it’s not surprising that business confidence in the country is falling. The monthly IFO survey slumped to 74.3 from 85.9, a record low and the biggest monthly fall on record.
Looking at the eurozone as a whole, the PMI data indicates a sharp contraction, similar to the one experienced in the UK. The indicator hit an all-time low of 13.5 in April, down from a prior record low of 29.7 in March.
Once again, the airline industry has been one of the hardest hit in Europe. IATA, the European industry body, has stated that 90% of flights in Europe have been cut, placing 25 million aviation jobs at risk. One of the challenges facing the industry is handling refunds for cancelled flights. The body estimates airlines have £28 billion in tickets that are eligible for refunds.
One of the statistics from the US highlighting the situation is the unemployment figure. As jobless claims increased to exceed six million, unemployment reached 4.4%. With the Trump administration often using employment figures to indicate success, it comes as a blow. As restrictions start to be lifted in the US, it’s hoped the job market will begin to recover but how long it will take remains to be seen.
Mimicking other economies, US factory production also slumped. According to Markit, last month experienced the fastest rate of decline since the 2008 financial crisis a decade ago.
As Asia was the first area to be hit by coronavirus and lift lockdown restrictions, the region could indicate how other economies will fare in the coming weeks and months.
Trade data from China shows tentative signs of recovery. The figures for March show exports fell 6.6% and imports shrank by 0.9% year-on-year. Whilst still in decline, it’s a marked recovery when compared to January and February, providing some light at the end of the tunnel.
In a bid to get the economy moving, China announced it was slashing the amount of cash SME banks have to hold in reserve. It’s hoped this move will pump more liquidity into the economy and release around 400 billion yuan (£46 billion) into the market.
Japan has also announced a stimulus package worth 108 trillion yen (£811 billion) in cash payouts to households and small businesses, as well as deferred social security and tax payments.
Whilst the market news paints a gloomy and uncertain picture, it’s important to remember that you’ve invested with a long-term goal in mind. Portfolios have been stress-tested and chosen in line with your risk profile and aspirations. If you have any concerns about your investments, please get in touch.
Please note: The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
With schools closing down several weeks ago and no firm plans of when children will be heading back to the classroom yet, parents across the UK are having to tackle homeschooling. It’s an experience that can be rewarding, but that doesn’t mean it’s not without its challenges.
Whatever age your child is, there’s an overwhelming amount of information available online about education and the ‘dos and don’ts’ of homeschooling. It can be difficult to sift through all that and some parents are finding themselves under pressure as they try to maintain the same level of education children would be receiving at school. If it’s something you’re struggling with, these seven tips could help.
1. Set a routine, but remember it’s not school
Setting a routine as much as possible is advisable. Understanding what they’ll be doing each day can help keep children focused on the work and projects they’ll be carrying out, remember to schedule in breaks and lunch too so they know when a recess is coming up too.
Whilst at first you may be tempted to plan a full school schedule from 9-3 filled with academic subjects, this can be challenging at home. Set a realistic routine that includes the core subjects of English and maths each day and a few other subjects that you can get more creative with. It’s worth keeping in mind that without the distraction of classmates and one-on-one attention from parents, children are likely to get through the work they’d typically do at school faster too.
Remember that school classes aren’t all academic either, taking part in art projects and playing are part of a typical school day. So, don’t beat yourself up if your child isn’t sat at a desk during their typical school hours.
2. Create a designated space
You may be working from home too, making designated office and classroom space a little tight. But setting some space aside can help children get into the right frame of mind and enable them to step away from schoolwork once ‘classes’ have finished. Whether it’s at your dining table or in the home office, try to make sure the space is as free from distractions as possible. A clean space with everything they need at the start of each session, from water to pens, can minimise the number of disruptions and get the work completed quicker.
3. Find out how your child works best
School can be fairly rigid in how they teach children, after all, there can be 30 children in a class. Homeschooling presents an opportunity to find out how your child prefers to learn, something that will be invaluable for them as they progress through education and have to take more responsibility.
Homeschooling is a chance to let children learn at their own pace too. Those that get a concept quickly aren’t held back and can move on to something else, whilst you can dedicate more time to those areas where they need more support to fully understand the work.
4. Don’t be afraid to use the TV and online resources
We read a lot about the importance of limiting screen time, especially for young children. But the TV and internet offer fantastic resources that can help children learn and make it fun too. Take history, for example, the CBBC Horrible Histories TV show is filled with games and songs that will entertain whilst teaching, or you could visit the British Museum from your sofa to discover the ancient Rosetta Stone and Egyptian mummies. Using pen and paper is still important, but technology can help escape the monotony of lockdown and inject some much-needed fun.
5. Arrange study sessions
Some schools across the country are hosting online teaching sessions. These are a great opportunity to learn with their teacher and see friends. With children missing out on the social aspect of school, these are important for simply chatting and catching up too.
If your child’s school hasn’t arranged these or you know that your child learns best in a group, why not organise a study session with some friends? It can help motivate them and improve their learning outcomes. Depending on the age of your child, one option would be to put a different child in charge of a ‘lesson’, providing a sense of responsibility and an opportunity to improve understanding by explaining it to others.
6. Let them have some say in projects
Now is a great time to let children indulge in passion projects. Whilst the core subjects of maths and English are essential to maintain when homeschooling, it’s worth asking what they’d like to learn about too. Whether science experiments or learning how to code sparks their interest, it can help get them through the day and provide a chance to build skills and knowledge they enjoy.
7. Get active
School isn’t about just sitting at a desk and learning, breaks, lunchtime and PE class are an important part of education and good for mental and physical health too. If children are flagging when it comes to the usual school tasks a quick burst of energy can help them focus ready for the next session.
Try incorporating some form of exercise into your routine every day. The Body Coach Joe Wicks has been doing a daily PE class online that’s gone down incredibly well across the country. The live sessions are fun and whether you choose to join in or take the time to focus on other areas, they’ll keep the kids entertained for 30 minutes.
At times we all feel stressed and anxious. Amid the current circumstances, you may feel more stressed than usual and not able to access your usual way of unwinding, whether it was hitting the gym or meeting up with friends. Mindfulness can help you feel calmer and better deal with the challenges of the day.
Mindfulness has become something of a buzzword recently and you’d no doubt heard of the term. But what does it actually mean? It’s a technique that focuses on being present in the moment without judging anything. It has links to Buddhism and meditation, but you don’t have to be spiritual to benefit from mindfulness.
Among the aims of mindfulness are helping you be more self-aware and feel calmer. With uncertainty over the pandemic, it’s not surprising that more people have concerns about their daily life. Making mindfulness part of your routine can help improve day-to-day wellbeing now and in the future.
How does mindfulness help ease stress?
When we’re stressed is often down to things that are outside of our control or concerns that haven’t yet materialised. Mindfulness is about focussing on the present and what you’re feeling now. Mindfulness can help you reduce stress by pulling our focus away from those areas that may be causing concern.
There are plenty of mindful activities to try too, so you’re able to find something that suits you. Meditation is one exercise that often springs to mind when thinking about mindfulness. But if you prefer to keep active, yoga may be better suited and those that enjoy getting creative can find colouring or other artistic projects just as relaxing.
5 tips for practising mindfulness
1. Switch off the electronics
Electronics provide numerous distractions. If you’re someone that is always looking at your phone or has music playing in the background, mindfulness exercises allow you to put down electronics for a short period. With the opportunity to connect with people at our fingertips, it’s not surprising that it can be difficult to focus on what’s happening now in your space only. Taking some time away from gadgets, even if it’s just five minutes, could be just what you need.
2. Start small when it comes to meditation
If you’re not used to it, you can get frustrated with mediation. Perhaps you’re annoyed at yourself because your thoughts keep drifting to worries or you can’t sit still. But it’s something that defeats the object of mindfulness! Start small when it comes to meditation, even just a few minutes clearing your mind can help you reset. Don’t worry if your thoughts drift either, it’s natural. Instead, acknowledge them, being mindful of why they’re coming to your attention, and try to let go.
3. Focus on what’s happening now
If you’re typically a multi-tasker, mindfulness can help slow you down in a good way. Even when we’re trying to focus on a project at hand, it’s easy to slip into thinking about past experiences and worrying about what the future will bring. Mindfulness aims to bring you back to the present and allow you to focus on what’s happening now. It’s a step that can help shut out concerns and worries that may not be useful when you look at the task objectively.
4. Focus on the positive and practice gratitude
Part of mindfulness is being grateful for what you already have. Amid hectic lifestyles, it can be easy to overlook the positive things that are already in your life, both big and small. Taking some time to think about them can deliver more confidence, improve your mood and allow you to focus on priorities. Some people prefer to write down what they’re grateful for, like a journal, but just pausing from time to time to appreciate the good things in life can be just as effective.
5. Enjoy just doing ‘nothing’
Finally, enjoy the time you set aside for being mindful. In our day-to-day lives, we’re often busy and focused on numerous things at once. Some people can feel guilty when they’re doing ‘nothing’, but sitting down and just being can be just as useful. Even if it’s just for a few minutes, it can provide you some time to focus on yourself and rest. Rather than seeing meditation or mindfulness activities as a waste of time, enjoy the feeling to get the most out of it.
If you’ve been putting off reviewing your finances, the lockdown is the perfect opportunity to complete some tasks that could help make sure your finances and plans remain on track. With potentially more time on your hands, here are seven things to do during the stay at home period.
1. Review your will and Power of Attorney
It’s estimated that more than half of UK adults don’t have a will in place and even more haven’t established a Power of Attorney. These two legal documents are vital for ensuring your wishes are carried out. Even if you do have both these in place, take some time during lockdown to review them.
A will is the only way to ensure that your wishes are carried out when you pass away. If you already have a will, you can write a new one or add a codicil to make amendments if your wishes have changed. It’s generally a good idea to review your will following life events and every five years.
A Power of Attorney gives someone you trust the power to make decisions on your behalf if you’re unable to do so. Losing the mental or physical capacity to make your own decisions isn’t something anyone wants to think about, but a Power of Attorney is important. There are two types, one covering health and wealth decisions and the other covering finances, you should have both in place.
2. Update your pension expression of wishes
Did you know your pension benefits aren’t usually covered by your will? Instead, you should complete an expression of wishes with each pension provider, stating who you’d like to benefit from your pension savings if you pass away. As pensions do not form part of your estate for Inheritance Tax purposes and are likely to be one of your largest saving pots, they’re a valuable asset to consider as part of legacy planning.
3. Find out if you have any ‘lost’ pensions
Over the years you may have accumulated several pensions as you switch jobs. If the pension is relatively small or the employment was from some time ago, it’s easy for pensions to become ‘lost’. Luckily, the government has a service that can help you find lost pensions and start taking them into account when it comes to retirement planning. You can find the contact details for workplace and personal pension schemes here.
4. Check your National Insurance record
It’s simple to check your National Insurance record, you can do so here. This tracks how many full years of National Insurance you’ve paid, as well as any National Insurance credits you’ve received, such as when taking time out of employment to raise children or care for someone. Why is this important? You need to have 35 qualifying years on your record to be eligible for the full State Pension when you reach retirement age. If you have gaps, it may be possible to pay voluntary contributions. The sooner you know there’s a gap, the better position you’re in to make the right decision for you.
5. Evaluate financial protection
If you already have financial protection in place, now is a good time to review the policies. As circumstances and priorities change, the policies that are right for us change too.
Whether you have an income protection policy, critical illness cover or life insurance, you should take some time to understand what each policy covers and whether they remain appropriate for you. Life events may mean that your current protection needs to be updated. These events could include starting a family, paying off your mortgage or starting a new job.
If you don’t currently have any sort of financial protection in place, it’s worth considering what would happen if your income suddenly stopped, you were diagnosed with a critical illness or the position your family would be left in if you were to pass away. It’s not something anyone wants to think about, but doing so can help you put steps in place to safeguard your and your family’s future.
6. Consider making gifts now
The current situation has placed a lot of people under pressure financially. Whilst your finances may be secure, your loved ones may not be in the same position and you may want to provide some support.
If this is the case, making use of the gifting allowance can make sense. Gifts are classed as Potentially Exempt Transfers when given. This means they can be considered part of your estate for Inheritance Tax purposes if you die within seven years of them being received. However, some gifts are considered immediately outside of your estate. This includes the gifting allowance. Each tax year, you can gift up to £3,000 to loved ones, which can be carried forward a year if unused, under this rule.
Other gifts that are immediately exempt from Inheritance Tax include those that are given from your disposable income.
During these times of uncertainty, we know that you may be worried about your finances and long-term plans. We’re still here for you, please get in touch if you have any queries about the above checklist or other aspects of your financial plan.
Please note: A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.
The tax implications of pension withdrawals will be based on your circumstances, tax legislation and regulation which are subject to change in the future.
The Financial Conduct Authority does not regulate will writing or estate planning.
Millions of Brits haven’t named a Power of Attorney. It may seem like something you can put off for a while, but it’s something we should all have in place.
A Power of Attorney is a legal document which gives someone you trust the ability to make decisions on your behalf if you’re unable to do so. Thinking about lacking the mental or physical capacity to be independent and make decisions isn’t something anyone wants to do. However, it can happen and having a Power of Attorney in place can provide you with some security if it does happen.
Being unable to make your own decisions is often something we associate with old age and dementia in particular. As a result, naming a Power of Attorney can seem like something that’s fine to put off for a few years or even longer. Yet, accidents and illnesses can strike at any age. It’s important to note that a Power of Attorney can make decisions on your behalf on a temporary basis as well as a permanent one. If you were to recover and in a position to take control of decisions again, you can do so.
You may think that you wouldn’t need someone to act on your behalf, that everything would stay on the course you’ve set out. But even being unable to make decisions for a few months can have a lasting impact. There are two types of Power of Attorney to consider when looking at what would happen if there was no one making decisions on your behalf.
Health and welfare: This relates to areas such as medical care, moving into a care home and life-sustaining treatment. You may have clear ideas about what you’d like to happen should you become ill. A Power of Attorney allows you to discuss these with a loved one who will then be able to make these decisions.
Property and financial affairs: This type of Power of Attorney allows a trusted person to manage your bank, pay bills and collect your pension. It can help ensure your finances remain secure and commitments are met. Even a few months could have an impact if someone isn’t able to access your accounts to settle bills, for example.
It’s also important to note that no one has the automatic right to make decisions on your behalf, this includes spouses and civil partners.
What happens if there’s no Power of Attorney?
If you don’t have a valid Power of Attorney in place, an application would need to be made through the Court of Protection. The Court of Protection can decide if you’re able to make your own decisions, make an order if you lack the mental capacity to make decisions, or appoint a deputy to make decisions on your behalf. The process can be costly and lengthy, delaying decisions that may be important. It’s a process that can be stressful for both you and your loved ones.
4 reasons to have a Power of Attorney
- A Power of Attorney should be part of your financial plan when considering ‘what-if’ scenarios and putting in place measures to ensure your security and plans stay on track as much as possible.
- It can provide financial security if something were to happen by enabling someone to take control of your finances, including ensuring payments are met and you’re able to access income.
- It’s also an opportunity to make sure your care and health wishes are met by discussing them with your trusted Power of Attorney.
- The legal document also supports loved ones, without one in place it can be difficult and time consuming to go through the Court of Protection to act on your behalf.
Supporting other estate plans
Naming a Power of Attorney should be done alongside a wider estate plan too. This may include writing or reviewing your will and considering a potential Inheritance Tax bill when you pass away. Putting these pieces in place together can ensure a cohesive plan that is aligned with your wishes. If you’d like to discuss legacy planning and safeguarding your future, please get in touch.
Please note: The Financial Advice Authority does not regulate Power of Attorney, will writing or estate planning.