So what implications does the comprehensive spending review have for you and your clients? I am not talking about the impact it will have on everybody’s finances – presumably few of us will emerge from the Chancellor’s axe-wielding unscathed – but how might it affect your thoughts on investment, pensions, insurance, protection and so on?
The thing is, I cannot quite shake the feeling that, unlike the Budget and pre-Budget statements we have grown used to over the years, with their ever-shifting tax bands and contribution limits and so forth, George Osborne’s speech served to highlight the inconvenient gap that can sometimes exist between Her Majesty’s financial services industry and what we might loosely describe as ’real life’.
This is not to condemn the sterling efforts of the financial press in conjuring up squillions of words with which to fill their pages and their websites – as the young Mr Grace might say, you’ve all done very well – but, dear reader, how much of it was actually, um, relevant, to what you do for a living?
Yes, I would imagine the rise in the state pension age, not to mention the change to pensions tax relief flagged up ahead of the review, may and indeed probably should cause you to revisit the files of a number of clients. But what about the area I am supposed to know most about – the wonderful world of investment?
Yes, there was the increase in the amount an individual may contribute to an Isa to an eye-catching and truly memorable £10,870 a year but let’s try and think a little bigger than that – which would be more than whoever came up with that £480 rise managed to do. Boom, boom. Let me think – there was…well, not a lot really.
That has certainly been the conclusion drawn by the handful of fund groups, who could stir themselves to offer a response on the day of the review and the similar number who have managed to do so since. As an illustration, I would highlight the thoughts of Newton’s global strategist Peter Hensman – principally because he was the first person to bring to my attention the most excellent pun “Slash Wednesday”.
“As the announcement merely confirmed the initial plans laid out in June’s emergency Budget, the market reaction has been negligible, with sterling and gilts barely shifting,” he said. “This is little more than a thumbs-up from markets, suggesting that the nature and size of the planned austerity measures had already been priced in. A lack of surprises was just was the market wanted.”
Well, fair enough but, put another way, that’s hundreds of thousands of jobs to go, millions of families worse off and steady as she goes on the old economic and investment fronts.
As I may have threatened before, one day I hope to be clever enough to write about the fiction that Her Majesty’s financial services industry exists to advise and serve 50-odd million adults when the reality is closer to…what? Five million? Two million? Less?
Maybe the Chancellor has given me a way in but I’ll save it for another time. Instead, let us finish by acknowledging the comprehensive spending review may have some vague consequences for the economy by playing my new Pick a Country, any Country game (available in all good toyshops and probably Argos this Christmas).
The trick is to equate the UK to another country as a way of illustrating your view on its short-term economic destiny. So you may think Osborne has cut too much, too soon, in which case we are about to do an Ireland.
Alternatively, you may feel the Chancellor has done enough to stop us from pulling a Greece. Maybe the country is about to manage a Canada post-1995 although, without the small matter of one of the strongest bull runs of modern times, that could just as easily be a Cantada.
Or perhaps you don’t have quite as much faith as Osborne in the Treasury’s post-cut expectations for UK growth or tax takes or managerial savings. In which case we are living in Narnia – and, oddly enough, we are back, once again, to the relationship between financial services and the real world.
Julian Marr is editorial director of www.marketing-hub.co.uk