The Ebb and Flow of Economic Hope

Posted on: 6th Jun 2020

The latest batch of gross domestic product (GDP) figures shows the global economy faltered at the end of last year. While decisive policy action is providing support to growth, the economic fallout from the COVID–19 outbreak is likely to dent hopes of an imminent meaningful recovery.

2019 Bows Out on a Low

Fourth quarter GDP data painted a bleak picture of the global economy at the turn of the year. In the UK, for instance, the economy stagnated with no growth at all, while the German economy barely registered any growth, and the French and Italian economies both shrank. Japan performed even more woefully, with the economy contracting sharply in the fourth quarter.

The US and China did perform more strongly, posting identical growth rates during the final three months of 2019 to those recorded during the preceding quarter. However, even in these two countries, the data confirmed a broader overall trend towards decelerating growth rates.

Policy Action Supporting Growth

The US Federal Reserve and a number of other central banks cut interest rates during the second half of last year, and this monetary stimulus has provided some support to the global economy. Policymakers are also introducing other measures designed to foster recovery; in December, for example, Japan announced a $120bn stimulus package to shore up its ailing economy.

But COVID–19 Will Hamper Recovery

The economic problems caused by the outbreak look set to hinder efforts to boost growth. While producing reliable estimates of the likely impact of the outbreak is extremely difficult, economists suggest China is facing a short-lived but potentially sharp economic shock. Given China’s significance on the global economic stage this, as well as the continuing spread of the disease, will undoubtedly have implications for growth across the rest of the world.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

It is important to take professional advice before making any decision relating to your personal finances. Information within this newsletter is based on our current understanding of taxation and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.

The information contained within this newsletter is for information only purposes and does not constitute financial advice. The purpose of this newsletter is to provide technical and general guidance and should not be interpreted as a personal recommendation or advice.

What Makes a Philanthropist?

It can be tricky to pin down precisely what qualifies as philanthropy. Basically, it’s an active desire to promote the welfare of others, often expressed by giving generously to charities or other deserving causes. If we count dropping some of our loose change into a collection box now and then or giving £3 a month by direct debit, most of us could regard ourselves as philanthropists.

So, how important is the scale of giving? To qualify as a true philanthropist, your scale of giving probably does need to be outstanding. At the high end of global philanthropy come billionaires such as Microsoft’s Bill and Melinda Gates, whose charitable foundation aims to enhance healthcare and reduce severe poverty worldwide. On the other hand, if philanthropy is measured in terms of self-sacrifice, a small monthly donation by someone of modest means could also be deemed generous.

Between the two extremes of the spectrum, are acts of philanthropy on many levels. To assist would-be philanthropists, various UK counties have their own community foundations. Individual benefactors and entities, inspired by the work of the great philanthropic families of the past, such as Cadbury, Rowntree and Rathbone, need to plan their benevolence carefully and take advice about its effect upon their wider financial affairs.

IF YOU WOULD LIKE ADVICE OR INFORMATION ON ANY OF THE AREAS HIGHLIGHTED IN THIS NEWSLETTER, PLEASE GET IN TOUCH.