David Bates Financial Adviser

Should politicians simply talk up the economy, when the truth is that it is still suffering and has a long way to go, before we can truthfully say it is growing?  A General Election is looming large on the horizon, and the points scoring process as started. Labour, via Lord Peter Mandelson, are accusing David Cameron, and the tories of putting down the British economy, when they should be talking it up. In the past this has happened, 1979, for example. A beleagured Prime Minister , James Callagahn claimed inflation was only at 8%, as Labour grappled with the winter of discontent, like a paratrooper trying to take the air out of his parachute on landing and put it back in its pack, or like King Canute trying to order the sea to obey him. However hard he tried the reality showed up. Britain was not prepared for how bad things REALLY were ,as interest rates soared after the election to tackle the parlous state of the economy.

We all know there are very difficult days’ ahead, more difficult than any of us can remember, so I say to all politicians ADMIT the truth, don’t pussy foot about dismissing opposition comments that are the stark ECONOMIC TRUTH. Britain is in a mess, Britain, as it has been proved , was “not best placed to come out of recession quickly”.  Gordon Brown is having to eat his words more and more, he is just not to be believed on anything, as he struggles to save HIS job, and not the country.

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via Spanish Repossessions Could Cripple Market.

So can the major governments dictate to the banks on how to reward their staff and waht businesses they should be in? I doubt it very much. If the banks don’t generate profits from astute investment skills, then governments lose tax revenues, businesses cannot borrow money and the economy stagnates or continues to flounder. Leave the banks to do what they do best. By all means banks should learn the principles of sound lending, but apart from that all this rhetoric, particularly in the UK, where the parties are canvassing your vote in the impending election, the banks are being used as the scapegoat for government failings.

According to many pundits the Euro is due for a bad year, which should mean better news for ex-pats who receive pensions later on. It might mean interest rate rises too, which will be good for savers, less so for people with mortgages, although the seriously depressed housing market in Spain will lessen the affect , as no-one wants mortgages in Spain right now.  The adverse UK winter MAY make people think about that home in the sun…..we shall see.

FTSE 100 gained 22% over the year ending at 5418. A staggering 56% increase from March to the year end. The record growth since 1997. Euro exhange rate up from 1.02 to 1.12, which represents some comfort to expats in Spain, but I am sure they would prefer to see it go higher. Despite Mr Zapatero’s comments, Spain will continue in the doldrums for quite some time.