Although the restaurants in my home town of Wokingham still seem to be doing all right, especially on a Saturday night, and a rather chic one has just opened (the Grasshopper Cocktail and Wine Bar) – I fear this is the calm before the storm.
For many households, I am sure belt tightening will soon become the order of the day as higher energy bills start to eat into their disposable income.
Maybe the real financial pain will come in the New Year as interest rates continue to rise, energy bills start jumping in price, and the economy slumps into recession – triggering job losses. I hope I’m wrong, I really do, but I can’t see a way out.
To make matters worse, a housing crash cannot be ruled out. Some economists are already saying the outlook for the housing market is the worst since the 2008 financial crisis, with prices forecast to fall by 13 per cent next year, according to Oxford Economics.
I’ve not mentioned geo-politics, but there seems no end to the ongoing brutal war in Ukraine. When and how this assault on Ukraine ends, nobody knows the answers to. It’s all rather scary and frightening. And of course, we can’t rule out an escalation of tensions in the Korean peninsula, nor increased Chinese belligerence towards Taiwan.
What all this means for financial markets is continued uncertainty. Of course, savings rates are rising, but by nowhere near enough to counter the erosive impact of inflation. Equities remain the best way of building long-term wealth, but the case for equities will be a hard sell while stock markets remain volatile.
Debt reduction, me thinks, is currently the soundest strategy in town. But it’s easier said than done when many households are struggling to make ends meet against a backdrop of rising bills.
How all this ends I do not know. Probably with Keir Starmer holding the keys to the door of Number 10. Whether he can rejuvenate this great country of ours is anyone’s guess. I’m not convinced, although I hope I’m wrong.
I hear Mallorca calling.
Jeff Prestridge is personal finance and wealth editor of the Mail on Sunday
