Santa is Coming
Posted on: 15 Dec, 21
Inflation, interest rates, border changes, more greek letters. A lot of things are a bit uncertain, but fear not Oury & Clark are here to assure you that everything will be fine if, like Lapland’s biggest exporter you do your forward planning.
Winter is Coming.
Oh yes, I’m nervous about the Game of Thrones prequel too. I mean can House of the Dragon possibly be as good as the original?
It’s not that, I’m worried about inflation.
Well we all tend to put on a little bit of weight over Christmas, a few weeks off the brandy butter in January and I’m sure you’ll be fine.
No, Clark, inflation and the further rises in interest rates the Bank of England is likely to impose to keep it down over the next year or more.
Ah, well serious stuff, but aren’t interest rates still lower than we have seen in over 300 years, surely businesses can stomach a bit more of a rise
Well, in the short term yes of course, and no one is suggesting that the Government wants HIGH interest rates - not with all their borrowing. But the recent and any further rate hikes could have a worrying effect on individuals, who businesses rely on as customers, as they might have a lot less money to spend.
I thought Dishy Rishi had increased the national minimum wage and the living wage and unemployment figures look like they are going in the right diection. That should help shouldn’t it?
Well he did do that, but given the context of the pandemic and the rising cost of living you could read this as a move towards steadying the economic ship, rather than getting it ready for a difficult long voyage.
What do you mean? You’ll have to forgive me. My interest rates are pretty low on this kind of stuff, though I do like boats.
Some people predicted in May that just a one percent increase on the interest rate would push the average proportion of household income spent on Mortgage Payments from 24% to 27%.
That doesn’t sound too bad, just tightening the belt by a half a notch. After Christmas of course.
By itself, no it isn’t but it doesn’t take into account the impact of these rises on renters, who tend to spend a higher percentage of their income on housing. It’s also an average, so the heavily mortgaged could really suffer, especially if they have a lot of other debts like credit cards. And that’s before we address the elephant in the room.
Well there are always going to be a few. Wait, what, there’s an elephant?
Yes and it’s wrapped in red tape.
Wrapped in mixed metaphors more like, but go on, you’re on a roll.
Well, in the last year since Brexit the ONS Border Survey has found that significant increases in paperwork, transport costs and customs duty were reported by roughly 50% of the companies canvassed.
Just a transition period surely? a bump in the road, or wave we can ride out, if we are going to stay in your boat.
Well maybe, no one really knows for sure, but it’s definitely causing a shortage of HGV drivers, making food scarcer and more expensive, and there’s new import rules coming in January which might make things trickier again.
Just another couple of waves, we’re a seafaring nation, we’ll be OK.
I love your optimism Clark, but with rising gas prices driving up energy costs across the board, more expensive food, and interest rate hikes and their knock on effects on mortgage and credit card payments a lot of people’s household finances could get pretty stretched.
Oh god you’re right, who am I trying to kid, cancel Christmas, we’re all doomed. Here come the White Walkers. Winter is Coming (again).
No need to panic just yet, there are plenty of steps people and businesses can take to make sure they are protecting themselves as much as possible.
Really, you can save Christmas?
Of course I can, I’m an accountant. Any households worried about the likely rises in interest rates and cost of living should get advice now. Good advice and prudent action will probably help them mitigate the worst effects of the interest rate rise and have them set fair.
Phew, sailing for calmer seas, and what about businesses?
Well, the same thing really, small businesses, like lower earners are probably going to feel the pain most keenly. They might struggle to get the loans they need to grow or see a downturn in profitability. If they trade with the EU they might feel this even more acutely, but there is still time to take the necessary steps to get themselves ready.
Hurrah, you’ve flown in on your dragon and slain the red tape beast whilst defeating the Night King of interest rate rises. Shall we sail off into the sunset, or is that a metaphor too far?
It’s Christmas, you can have as many metaphors as you like.
I’d prefer an extra mince pie.
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We are but two fictitious characters throwing out ideas and comment to stimulate debate and collect information. As professional service firms, we are open minded people and think independent thought and debate is essential to help understand, as well as navigate, complex problems. By joves – doing business across Europe (and the world) is set to become a whole lot more complex in light of recent seismic political events. As businesses - we provide information and hopefully some wisdom - and we see this blog and its caricatures merely as a much more fun, perhaps slightly controversial way, of stimulating debate and collecting ideas. We’re searching for some true pearls of wisdom, and as we find them, we’ll share them with you.
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What’s wrong Oury? you look agitated.