Savers and spenders are being hit with bad news as the cap comes off energy prices and their investments suffer heavy write downs.
Ouch! https://t.co/dDSJgAr2BN
— Josephine Cumbo (@JosephineCumbo) March 11, 2022
Investing in BRICS economies was widely touted as forward thinking, ever since Goldman Sachs’ Jim O’Neill coined the term in 2001.
(Osaka – Japão, 28/06/2019) Presidente da República, Jair Bolsonaro, durante foto de família dos Líderes dos BRICS..
But today my phone is plastered with messages from any organisation from BAT to Strava telling me they “Stand by Ukraine”. It is proper they do , but we should be aware that there is a price to pay. BAT’s u-turn on its Russian policy has seen it revise its growth forecast for the year from 5% to 2%, its shares plummeted in value. BAT’s press release concluded that by the end of the year it would have no further dealings with Russia.
The tale of BAT is typical of the write-downs and write-offs concerning British companies with Russian associations. We will all pay, few people’s pensions or stocks and shares ISAs do not have exposure to these stocks, this is not a blip , this is a strategic retreat from a valuable, if wholly unedifying market.
The cold fact is that whatever we may save in 2022 is likely to be wiped by the impact of the war in eastern Europe. We cannot pretend that everything in the garden is rosy, for many dependent on their savings to fund their retirement , including those who have transferred out of DB plans, the consequences of this war are real and long-term.
And the pain does not stop there. Our reliance on commodities from wheat to plutonium, but mainly to energy, have meant an immediate rise in fuel prices (160p a litre on your forecourt) and an anticipated rise in your shopping basket as staples such as bread, soar in price.
Worst of all, household fuel bills, already set to rise when the price cap is released in April, now look to rise again.
FT Exclusive: UK households face a £38bn hit to their budgets as electricity and gas bills are expected to double following Russia’s invasion of Ukraine: https://t.co/3LTjoVn35p pic.twitter.com/PViBxgcz7t
— Financial Times (@FinancialTimes) March 11, 2022
Jo Cumbo has been asking her followers for examples of the pain to come
We’ve gone from £120 a month last Feb, to £180 a month this Feb, to now be told it will be £350 a month going forward!
— Ken Swaby (@KenSwaby) March 11, 2022
But with inflation figures expected to exceed 8%, people are not getting commensurate pay rises. teachers can be taken as a bell-weather for those in work, and the situation is even more critical for those reliant on state benefits.
By default benefits will be uprated next month with last September’s inflation rate, 3.1%.
But the expected rate for 2022-23 is now 8.4%. That means a 5% cut in the real value of benefits.
This is only temporary, but temporary income declines can be harder for poorer households
— Institute for Fiscal Studies (@TheIFS) March 10, 2022
How the other half live.
I’m well aware that the majority of people who read my blog will not be earning less than the average (actually I currently do, but I have a pension too).
According to GoSimpleTax, around half of the UK earn less than £30,000 — with the median income in 2020 being around £30,800.
With that in mind, Martin Lewis had a very important message to those households earning less than the average. Speaking to last week’s TV audience he said
“If you have an income of less than £30,000 and you are struggling it is worth spending 10 minutes on a benefits calculator to see what you are entitled to.”
Martin senses an emergency and it’s an emergency for those whose liabilities are likely to exceed their income, the emergency is called mounting debt.
