Money matters with Adrian Murphy

Dec 30 2011 by Lisa Boyle, Ayrshire Post (main ed)

I hope everyone had a wonderful Christmas and is now looking forward to the usual Hogmanay celebrations.

2011 has been quite a year hasn’t it?

At Murphy Financial we have been working hard to make sure our clients have been well looked after and kept informed over what has been undoubtedly a difficult time for everyone.

The Eurozone crises deepen to almost the point of collapse of the Euro, while Standard & Poor’s, one of the world’s biggest ratings agencies did the unthinkable and downgraded the USA’s AAA credit rating.

This has led to a year of extreme volatility on the stock markets leading to problems with those who rely on them for income as well as savings and pension funds.

The FTSE 100 is down around 10 per cent on the same time last year having had some fairly serious peaks and troughs over that period.

While this is not good, it doesn’t affect you directly in your day to day life.

What will have affected you is the dramatic rise in inflation to over 5 per cent, which whilst may not seem like a lot on your food and drink, when combined with record fuel prices at the pumps and huge increases in gas and electricity prices, it begins to take its toll.

All of this has lead to low consumer spending which further impacts on the economy.

Looking forward to 2012

After all that doom and gloom is there something to look forward to in 2012?

We think so.

There are several factors that will drive this:

•European politicians agreeing a consensus on how to finally address the debt issues

•The US election. This is likely to lead to some economic stimulus in the months running up to it, again, provided agreement can be reached.

The shadow of another recession will loom large until the politicians can agree how to sort out the mess we are in, once and for all.

However the private sector will play its part.

While times have been tough, the general picture away from politics is that households in

the UK have been paying down debt

The large companies that help drive the economy also have strong cash flows and healthy

balance sheets so, are well placed to invest in people and infrastructure.

As inflation begins to tumble, while interest rates remain low, we should begin to see things turn around in the second half of the year.

There will be no rush by the Bank of England to try and control inflation by increasing interest rates for at least another year if not more.

This might sound strange coming from a Financial Planner, but the best advice I can give if you would like to do your bit, is to get out there into the January sales and spend some of your hard earned money.

Have a great New Year and I will be back once the fog of celebration has lifted.