Making sense of this crazy world
The two elephants in the room
This week, I thought I would try to address the elephants in the room: what will Andy Burnham’s leadership mean for our finances and, when will the stock market bubble burst and what will cause it? Not straightforward, particularly regarding the latter.
The oil price may come to the rescue and extend stock market momentum as we are, at last, seeing more activity in the Strait of Hormuz. Trump has certainly been frustrated with how long it’s taken for the reduction in the oil price to be passed on to consumers in the hope of a positive impact for the US economy. He might just have one eye on the mid-term elections!
As I write, the oil price has fallen back to pre-Iranian conflict levels. Good news regarding inflation.
Markets have been bobbing around like a small boat in a stormy sea recently, but improved oil flows and strong AI earnings have re-galvanised markets towards the end of the week.
I’m hoping to write a shorter Commentary than normal. If you are anything like me, sleep deprivation has made it hard to concentrate for too long! In all seriousness, this Commentary probably won’t end up much shorter, but it will be focused on the two elephants mentioned above.
This week’s content:
- Andy Burnham and what could happen to our finances
- Why do the investment markets worry if interest rates rise?
- A bubble is undoubtedly forming
- How to play this tactically
- Conclusion
Andy Burnham and what could happen to our finances
It’s nailed on that Andy Burnham will become the next leader of the Labour Party. The question in the minds of so many investors is what will this mean for our finances?
It looks highly likely that radical change will occur across a number of areas, but much depends on his backing from within the Labour Party, along with the constraints he will have in this Parliament, before the next election. It would appear he has big plans for changing how we are all taxed.
I’ll pass comment under each heading. The information has been gathered from numerous sources.
What he won’t change
Labour’s promise not to increase the rates of income tax, VAT or employee national insurance contributions will stay. During his by-election campaign, Burnham said: “I am committed to the manifesto commitments on tax, that’s really important from a trust point of view.”
It’s highly likely, therefore, that these taxes won’t change until the next election, but then again, Rachel Reeves was going to increase income tax until members of her party suggested otherwise and she then conveniently found some more money down the back of the sofa!
Sarah Coles from the investment platform AJ Bell said Burnham would face similar difficulties to Reeves, particularly if the country is hit by economic turmoil. She said: “Promising to stick to fiscal rules means that if costs go up and you need more tax revenue, you will have put yourself in a bit of a bind and will have to tinker around the edges” (source: BBC).
Continues…
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