Podcast Summary
Brexit vote causes market volatility: Despite initial expectations, Brexit led to significant market swings, including large drops for the pound and FTSE 100, as traders made incorrect bets.
The Brexit vote results caused significant market volatility, with the pound and FTSE 100 experiencing large swings. Georgie Frost and her guests on Consumer Issues on Share Radio were surprised by the outcome, with many initially expecting remain to win. The day after the vote, they discussed their reactions and the immediate market reactions, which saw the pound and FTSE 100 put in decent performances before experiencing large drops due to traders betting incorrectly. The coming weeks and months are expected to bring more interesting developments as the dust settles and the impact of Brexit becomes clearer. Lee Boyce shared his disbelief at the result and the market reactions, urging listeners to stay calm and united as a country.
Immigration issue was a game changer in Brexit vote: The EU referendum outcome was influenced by the Leave campaign's focus on immigration, despite economic arguments presented by various institutions. Voters were concerned about sovereignty and felt unaddressed on this issue for decades, making it the deciding factor.
The Leave campaign's success in the EU referendum was largely due to their focus on the immigration issue, despite the economic arguments presented by various institutions. Dan Hodges, a political commentator, points out that the economic strategy of the Remain campaign had been dominating the campaign until they shifted their focus to immigration. This shift resonated with voters who were concerned about sovereignty and who felt that immigration was an issue that had not been adequately addressed in the country for decades. The economic arguments, presented by institutions such as the OECD, Obama, the Bank of England, and the IMF, were not enough to sway voters who were looking for a sense of control over their own country. The lack of emphasis on the benefits of free movement within the EU by the Remain campaign was also a missed opportunity. Ultimately, the immigration issue tapped into deep-seated concerns and fears, and it was the deciding factor in the Brexit vote.
Bank of England responds to Brexit uncertainty with regulatory buffer cuts: The Bank of England reduces regulatory capital buffers to encourage lending, aiming to support the economy during Brexit uncertainty, while urging caution with spending due to potential risks.
The UK economy faces uncertainty following the Brexit vote, with potential risks to financial stability. The Bank of England has responded by reducing regulatory capital buffers for banks, allowing them to lend more to businesses and households. This move aims to support the economy and reassure consumers during this period of uncertainty. However, households are urged to be cautious with their spending due to potential economic instability, including potential falls in employment rates and house prices. The Bank of England's actions aim to strike a balance between encouraging spending and borrowing, while also warning of potential risks. The long-term financial stability of the UK economy in a post-Brexit environment remains uncertain.
Bank of England's stance on Brexit influenced by financial stability concerns: The Bank of England's decision to hold off on introducing a countercyclical capital buffer could free up £150 billion for lending, while Brexit uncertainty affects the pound and housing market, making it a complex economic landscape.
The Bank of England's stance on Brexit is influenced by its role in maintaining financial stability and concerns over potential credit crunches. The pound's depreciation against major currencies, due to Brexit uncertainty, can make British businesses' earnings appear larger but also increase borrowing costs. The countercyclical capital buffer, a tool to encourage banks to set aside more capital during economic good times, was due to be introduced but has been put on hold, potentially freeing up £150 billion for lending. The housing market is experiencing a period of uncertainty with some sellers reducing prices and others eager to sell before Brexit negotiations begin. Overall, the economic landscape is complex, with various factors influencing the market and making it a challenging time for buying and selling.
Brexit's Impact on Housing Market Confidence: Brexit's uncertainty has led to a drop in housing market confidence, affecting areas with lower wages and causing inflation and rising producer prices, while low-interest rates make savings less attractive.
The uncertainty surrounding Brexit has led to a drop in confidence in the housing market, particularly in areas outside of financial centers. This confidence issue is not limited to London and the southeast markets, but is also affecting areas with lower wages. The first signs of the impact of Brexit on the economy are starting to emerge, including inflation and rising producer prices. For savers, the low-interest rate environment continues to make savings accounts less attractive, and the popular Santander 123 account is now offering lower interest rates. Overall, the effects of Brexit on the economy and the housing market are still unfolding, and it remains to be seen how they will develop in the coming months.
Santander cuts interest rate on 123 current account to 1.5%: Santander reduced the interest rate on its 123 current account from 3% to 1.5%, affecting new and existing customers who joined in the last year. Banks aim to make a profit and may adjust interest rates accordingly.
Santander's 123 current account, which launched in 2012 with a generous 3% interest rate on balances up to £20,000, has recently reduced its interest rate to 1.5%. This change may have been prompted by the Bank of England base rate cut and the bank's ability to lend money to other institutions. Existing customers who switched to this account in the last year are particularly affected by this change, as they missed out on the higher interest rate. While other banks have not yet announced any plans to follow suit, Lloyds and Halifax have mentioned that their current account rates are under review. Santander's decision to cut interest rates may be disappointing for some customers, but it's important to remember that banks are businesses that aim to make a profit. If it becomes too expensive for Santander to run the account, they may need to adjust the interest rate accordingly. Ultimately, customers should consider their options carefully and weigh the pros and cons of staying with Santander or switching to another bank.
Current Accounts Offer Better Rates Than Savings Accounts: Amidst low-interest rates, current accounts might be a better option for savers, but it's crucial to consider individual circumstances before making a decision.
Current account rates are dropping significantly, making it difficult for savers to earn a decent return on their cash. With easy access rates dropping to as low as 0.1%, current accounts, which still offer some interest, might be a better option. However, it's essential to consider individual circumstances and crunch the numbers before making a decision. The savings crisis continues, and low-interest rates make saving less appealing for many. The situation is particularly challenging for those just starting to save or those with large sums to invest. The uncertainty and lack of attractive returns may discourage people from becoming savers. Despite these challenges, it's crucial to keep saving, even if it means putting your money in a current account for now. The situation might change, and being proactive about your finances can help you weather the storm.
UK's future in tech uncertain after ARM sale to Japanese firm: The sale of British tech giant ARM to a heavily indebted Japanese company has raised concerns about the UK's role in shaping future tech and its infrastructure crisis adds to the uncertainty.
The UK is experiencing a period of instability and exhaustion, both politically and in terms of infrastructure, and there are concerns about the country's future in technology following the sale of ARM Holdings to a Japanese company. The prime minister has emphasized the country's openness to business and investment, but there are criticisms that this deal may put Britain at a disadvantage in determining the next generation of technology. The sale of ARM, a British company with global reach and a significant impact on the tech industry, to a heavily indebted Japanese firm has raised questions about the UK's role in shaping the future of technology. The country's infrastructure, particularly its transport system, is also in a state of crisis, adding to the sense of uncertainty and exhaustion. The prime minister has suggested taking a day off for the country to regroup and focus on making Britain great again. However, the long-term implications of these developments remain to be seen.
British pound's fall makes British firms more attractive for takeovers: Foreign companies like SoftBank are buying British firms due to cheaper costs and cash-rich positions, leading to loss of British ownership in successful companies like ARM.
The fall of the British pound has made it more attractive for foreign companies, like SoftBank, to buy British firms through takeovers. This is due to the cheaper cost of acquiring British companies and the cash-rich position of many Japanese companies. However, the loss of British ownership in a successful company like ARM can be seen as a sad day, as it was not due to poor management or performance on ARM's part. Another topic discussed was inheritance tax, which is a tax on gifts made during a person's lifetime or upon their death. It is payable at a rate of 40% on UK assets, and even non-domiciled individuals who own property in the UK are subject to the tax upon their death. The debate surrounding inheritance tax revolves around the fairness of taxing earned income twice, once through income tax and again through inheritance tax. However, it also serves as a mechanism to prevent the complete flow of wealth from one generation to the next.
Understanding Inheritance Tax: Rules and Public Perception: Inheritance tax affects a small percentage of the population but sparks strong opinions due to perceived unfairness. UK residents pay on all UK assets, while non-residents only pay on UK assets. UK domiciles pay on worldwide assets. Despite efforts to increase the threshold, it remains a contentious issue.
Inheritance tax is a complex issue that sparks strong opinions due to its perceived unfairness, despite only affecting a small percentage of the population. The rules surrounding inheritance tax can be confusing, with different implications for those who are domiciled or non-domiciled in the UK. For instance, UK residents pay inheritance tax on all their UK assets, while non-residents only pay on their UK assets. The tax is also payable on worldwide assets by UK domiciles. The public's dislike for inheritance tax stems from the idea of working hard to build wealth for future generations, only to have a significant portion taken by the government upon death. Despite efforts to increase the tax, such as the Tory pledge to raise it to £1,000,000, it remains a contentious issue. Ultimately, understanding the rules and the public's perception of the tax is crucial for anyone dealing with inheritance matters.
Discussing the unfairness of UK's inheritance tax: The UK's high inheritance tax rate of 40% and its focus on property value increases are seen as unfair. Suggestions include reducing the rate to 20% and simplifying the policy to encourage saving and property ownership.
The UK's inheritance tax system is a complex issue that affects primarily those with significant wealth or properties in London and the South. The majority of people, even those in the north who will be impacted by the tax, view it as unfair. The real problem, according to the discussion, is the high tax rate of 40% and the fact that it's largely based on the increase in property values, which people have not paid tax on before. The suggestion is to reduce the rate to 20% to make it more palatable and less of a concern for people. Additionally, the discussion touched on the possibility of negative interest rates for savings accounts in the UK, which could further impact people's finances. Overall, the conversation highlighted the need for fair and simple tax policies that don't discourage saving or penalize people for owning property.
Santander Considering Reducing Headline Rate on 123 Current Account: Santander may reduce 123 current account rate to 2%, impacting 3.8M users, particularly those with up to £20K balance, while potentially introducing a monthly fee and removing tiered interest rates
The Santander 123 current account, which has been popular for its cashback on bills and competitive interest rates, is considering reducing its headline rate from 3% to a flat 2%. This could impact around 3.8 million users, with those having balances up to £20,000 being potentially better off due to the removal of tiered interest rates. The account's popularity has put pressure on Santander, leading to a monthly fee increase from £2 to £5 in January and potential elimination of the interest element. Despite the changes, the account's name, "123," may not be altered. The shift comes amid industry-wide cuts to savings and ISAs, making it increasingly difficult for savers to secure decent returns.
From common to valuable: Current accounts and classic cars: Current accounts with high interest rates attract customers, benefiting banks for cross-selling. Meanwhile, some common cars from the past are endangered, while certain classic cars appreciate in value.
Current accounts have become a popular alternative to savings accounts due to the high interest rates offered by some banks. This trend benefits banks more as they can cross-sell other products to current account holders. Meanwhile, in the world of cars, what was once common is now becoming rare. Some of the most common British cars from the 70s and 80s, like the Austin Metro, are now endangered models with fewer than 500 remaining. Conversely, certain classic cars, such as the Fiat Dino, have seen significant value increases, making them worth considering for collectors. In essence, what was once ordinary can now become valuable, and what was once valuable may continue to appreciate.
Cars from the 1960s and 1970s: Nostalgia and Rarity: Despite fewer surviving, 60s and 70s cars still attract collectors and hold value. Less popular models like Austin Allegro and Ford Cortina can draw crowds. Majority have rusted, died, or scrapped.
While the number of classic cars from the 1960s and 1970s still on the road is significantly lower than the total number produced during that era, they continue to hold a great deal of interest and value for collectors and enthusiasts. Cars like the Austin Allegro and Ford Cortina, despite being less popular during their time, can still draw a crowd at classic car shows due to nostalgia and rarity. However, the majority of these cars have either rusted away, died, been scrapped, or traded in through various schemes encouraging the purchase of new vehicles. As for the origin of the line "The canary is so ugly it wouldn't look any worse if it had been keyed," it remains a mystery, but it did bring a smile to Rachel Rickard Strauss during their discussion on least favorite cars. Join editor Simon Lambert and Rachel next week for more insightful financial journalism on This is Money.
