News Wrap-Up: Pensions Under Attack | Time To Bet On Ethereum | Net-Zero To Cost £1.4 Trillion

Hello and welcome to Money Unshackled News. The headlines:

  • BoE fails to raise interest rates, despite everyone saying they should have. Bank governor denies policymakers ‘bottled it’.
  • Hidden tweak to pension rules in the Budget could see workplace pension fees shoot up.
  • JPMorgan says Ethereum is a better bet than Bitcoin as interest rates rise.
  • UK leads the way in retail footfall recovery among EU peers and Christmas is expected to be the biggest spend ever.
  • Watch out for new ‘pig butchering’ crypto scam which saw somebody lose $60k.
  • As Lloyds Bank shuts 48 more branches, high street banks will disappear from the UK by April 2032 if the current rate of closures continue.
  • Are you sure you want to go green? The real cost of Boris Johnson’s Green Britain plan is expected to be £1.4 trillion.
  • And finally, half of borrowers will still have a mortgage aged 65+.

We’ve gathered all the latest money news from the past few weeks that matter most to your finances. If you find this financial news bulletin useful then hit the like button and let us know down in the comments. Let’s check it out…

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BoE fails to raise interest rates

The Bank of England holds interest rates at an all-time low of 0.1%, despite widespread anticipation it would increase the rate to 0.25%. The Monetary Policy Committee voted by a majority of 7-2 to maintain the Bank rate as it is.

Analysts have said that they expect the rate to be hiked to pre-pandemic levels in the next 18 months as the economy resumes a more steady course.

Governor Andrew Bailey fought back amid suggestions that the Bank wrong-footed investors by signalling an imminent rate rise ahead of the decision and told Sky News: “It was a very close call”.

Lenders Natwest, Lloyds and Barclays – whose profitability tends to be boosted by higher rates – saw their shares fall by 4% or more as a result of the news.

Mr Bailey told Sky News that rate-setters still needed to see “hard evidence” on the state of the jobs market before any hike and that an increase would not directly address supply chain issues that are key causes of the acceleration in price rises.

In related news the UK is facing a cost-of-living squeeze after the Bank of England predicted that inflation will be heading to 5% early next year, its highest level in a decade.

Our take on the matter is that it’s only a matter of time before the decision is made to slowly begin to start raising the interest rate but as stated many times before we cannot see this increasing much due to the financial struggles that both Britons and the government are facing.

Hidden tweak to pension rules in the Budget

The Budget slipped by largely unnoticed in October, as for once it seemed that taxpayers, savers and investors had managed to avoid the usual punishment beatings.

But a little reported tweak to pension rules slipped though the net which may have big consequences for those of you saving for retirement. Workplace pensions currently have a fee cap in place which stops your fund provider from fleecing you for fees. This Budget paves the way for this cap to be removed.

Martin Lewis says: “This can be positive, as it allows a wider choice, but must not be allowed to push up the norm for charges for simple funds.” And if you’ve looked at your workplace pension, the fees on funds can be pretty steep already.

A half solution might be to at least move old workplace pensions to a SIPP where you can pick your own low-cost funds; more information on SIPPs can be found here and includes welcome offers for some providers. But if you want your employer to match your contributions, you’ll likely have to stick with the more expensive workplace pension.

JPMorgan says Ethereum is a better bet than Bitcoin as interest rates rise

JPMorgan says Ethereum is a better bet than Bitcoin as interest rates rise, due to the boom in DeFi and NFTs. Ethereum is at the heart of decentralized finance and the market for non-fungible tokens, two booming areas. Bitcoin is apparently more akin to digital gold, which is likely to fare less well as interest rates and bond yields rise.

JPMorgan analysts, said in a recent report that rising interest rates could pose a problem for Bitcoin, just as they traditionally do for gold. “With Ethereum deriving its value from its applications, ranging from DeFi to gaming to NFTs and stablecoins, it appears less susceptible than Bitcoin to higher real yields.”

The bank’s analysts also said Ethereum may be the better bet over the longer-term due to the growing importance of environmental concerns in investing.

Both cryptocurrencies currently use a validation and security system that uses vast amounts of electricity. Yet Ethereum plans to move away from this system to a far less energy-intensive one by the end of 2022.

However, JPMorgan has said that both cryptocurrencies currently appear overvalued since most institutional investors won’t touch them due to being far too volatile.

Honestly, we have no idea how anyone can attempt to value any crypto at this early stage in their lives. Who would seriously be surprised if Bitcoin or Ethereum tripled in value from here, or collapsed threefold? Much of their value depends on their always being someone else willing to buy the coins.

Could either follow the path of SQUID coin, a cryptocurrency designed around popular Netflix show Squid Game, which rocketed 23 million percent in value to $2,860 a coin… only to plummet to nearly $0, when investors found no-one else was waiting in the wings to buy their coins.

UK leads the way in retail footfall recovery amongst EU peers

Now for something you’ll never see on the telly – some positive news! The number of people shopping on Britain’s high streets in October beat all major economies in the European Union new data has shown, reports Yahoo Finance.

Total UK footfall saw a 3.2 percentage point improvement in October compared with the month before, boosted by the school half-term and Halloween.

However, it’s still down 13.7% compared to this time 2 years ago – i.e., if we compare it to the October before the pandemic.

We may have lost the Euros to Italy back in the summer but we’re smashing their retail figures; Italy’s footfall was down 34.6%. Similar dire figures were seen for Spain, down almost a fifth; Germany slumped 26.2%; and France declined 34.9%.

The Sun reports that Christmas shoppers will spend a record £85bn as eager families are already hitting high streets for presents and food. Brits are expected to splurge over £5 billion more than last year’s £80bn Christmas shopping bill. Money saving website VoucherCodes says the average Brit will spend nearly £1,300 per person for the special day.

Watch out for new ‘pig butchering’ crypto scam

A massive global crypto fraud which began in China has recently spread to the US and Europe. The Sun reports that a guy lost $60,000 in a new crypto scam when a dating site fraudster brainwashed him into investing in a fake scheme. This unfortunate guy is one of thousands who have fallen victim to the scam.

The fraud is known as sha zhu pan – or “pig butchering”- in a sick reference to how the target is said to be “fattened up” ready for slaughter. It sees professional con artists linked to the Chinese mafia spend months building victims’ trust before pushing them to invest in bogus get-rich-quick schemes.

The guy bought some Ethereum via an online broker she recommended. The clever part of the scam is that the victim initially makes a profit and is even able to withdraw the money – but by then they are hooked. Sha zhu pan has been huge in China in recent years but was virtually unknown in the West until this year.

The scam focuses on tech-savvy young professionals with an interest in cryptocurrencies. This could include many of our audience, so stay vigilant. It’s probably similar to the scammers that are always clogging up the comments section below our and other Finance YouTubers’ videos, so be wary of YouTube comments about crypto too!

High Street banks will disappear from the UK by April 2032

Lloyds Bank is to shut 48 branches amid a decline in customer visits. Similar stories to this have been hitting the headlines for years now, so should come as no surprise. But what may surprise you is the rate of closure. Financial analysis firm AskTraders said high street banks will disappear completely from the UK by April 2032 if the current rate of closures continues.

Just 7,655 banks remain on British high streets, with an average of 55 banks closing every month for the past five years – that’s 660 a year.

While the loss of a useful service and jobs is quite sad, honestly when was the last time you actually visited a bank branch? Anecdotally, people we’ve spoke to who say they occasionally use a bank to pay in a cheque had no idea that most good banks allow you to pay in cheques using their mobile app by simply taking a photo.

Of course, closure of banks will hurt some people more than others. Trade union Unite said “These closures will deny access to vital services and cash to thousands of customers who will be disadvantaged as a result.”

But the fact of the matter is that society is increasingly moving towards being cashless and online, so surely banks cannot incur massive costs to please a small percentage of people? Moreover, most people are unaware that basic banking services for your bank are likely accessible via the Post Office, which are usually present in every town in the country.

The real cost of Boris Johnson’s Green Britain plan is expected to be £1.4 trillion

Is going green such a good idea? While most will answer yes and say it’s of vital importance, the cost is set to be astronomical. Downing Street has set out its plan to cut carbon emissions to net-zero by 2050, and the inflation adjusted cost of doing this is expected to be £1.4 trillion over the next 30 years, the Office for Budget Responsibility has warned. That’s the equivalent of £1,700 a year for the average household, on top of £3,000 of tax increases per household already announced over the last year.

Phasing out gas boilers over the next decade and investing in home insulation, electric car charging points, and nuclear power plants are all part of Boris Johnson’s vision for ‘Green Britain’. We are yet to be given an exact breakdown of how costs will be spread, but higher taxes and higher consumer prices are expected to contribute to the total sum.

Replacing boilers with low-carbon electric heat pumps is expected to cost £10,000 on average and not everyone will benefit from a voucher scheme which covers half that sum.

The Telegraph reports that less than half the population is willing to pay thousands of pounds to make their homes greener and help meet Boris Johnson’s net zero goals.

Half of borrowers will still have a mortgage aged 65+

And finally in property news, half of borrowers will still have a mortgage when they are aged 65 and over, reports whatmortgage.co.uk. Increasing numbers of people are borrowing with mortgages in their later life leading to concerns the dream of retirement may be under threat for many.

UK Finance said: “There’s been growing demand for mortgages from those aged over 55 and this is set to continue as more people live and work for longer.” For the average person this is a very worrying sign. The ability to work past your sixties should not be taken for granted. Ill health leaving you unable to work and unable to fund your mortgage repayments in retirement is a real threat.

For the investors watching, you may actually prefer to still have an outstanding mortgage in old age because you might be willing to tolerate the risk of borrowing on a cheap mortgage to invest and earn greater returns elsewhere. This is something we ourselves might plan to do if we’re not already loaded at this point!

What’s your opinion on higher consumer prices and higher taxes to fund green policies? Join the conversation in the comments below.

Written by Andy

 

Featured image credit: Vitalii Vodolazskyi/Shutterstock.com

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday:

The News: EFFing Crisis | Shrinking Rental Market | Student Loan Repayments To Increase

Hello and welcome to Money Unshackled News. The headlines:

  • EFFing Crisis: Energy bills set to rise by £400, empty shelves at the supermarkets set to ruin Christmas, and no fuel at the pumps.
  • 15% global minimum corporation tax rate to be imposed. Are consumer prices set to rise as a result?
  • US bank JPMorgan Chase launches in Britain offering 5% interest on savings.
  • Average salary per head at Vanguard is revealed as a whopping £195k.
  • Crypto-trading hamster is now beating world’s top investor Warren Buffett and the S&P 500.
  • Deutsche Bank predicts a 5-10% stock market correction before the year end. Are you prepared?
  • Britain’s total rent bill falls by £5bn despite rising rents as more young people stay living with parents.
  • Twitch hack has revealed how much revenue the platform’s biggest streamers make.
  • And finally, Rishi Sunak reportedly plans to slash student loan repayment threshold, costing graduates billions.

We’ve gathered all the latest money news from the past few weeks that matter most to your finances. If you find this financial news bulletin useful then hit the like button and let us know down in the comments. Let’s check it out…

Don’t forget to check out the Money Unshackled Offers page where you’ll find free stocks, hundreds of pounds of free cash in welcome offers, and discounted memberships to stock analysis tools like Stockopedia. Stockopedia will help you pick stocks like a pro, and with our link you’ll get a free 14-day trial followed by a 25% discount.

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‘EFFing crisis’

Brace yourself for the ‘EFFing crisis’ this winter – that’s “E F F”, for energy, fuel and food. Energy bills set to rise by £400 for millions of households in the spring as gas price soar to record highs!

Food and fuel shortages are set to continue for months ahead with prices skyrocketing. There are rumours circulating that Christmas will be cancelled due to an escalating food crisis with many families having to go without Turkey or pigs in blankets this year.

More serious than that though is the surging cost of wholesale gas, which is pushing up gas and electricity prices across the country. According to power-technology.com the wholesale gas price is up by 300% year-on-year.

Consumers have been somewhat protected from an immediate serious price hike due to the energy price cap. The cap was increased on 1 October, meaning about 15 million households face a 12% rise in energy bills. However, the Energy regulator, Ofgem said the cap will go up again in April, the next time it is reviewed. The Independent are reporting that bills will be going up by a further £400!

The energy price cap is another failed model by the UK government. It is designed to control the amount that suppliers can charge customers for each unit of energy, making sure prices are fair and reasonable.

This sounds good in theory but it’s destroying the entire business model of energy companies who are now being forced to sell energy at a cheaper rate to their customers than what they can buy it for themselves in the wholesale market.

Energy companies have been dropping like flies and Omni Energy predicts it will be the 13th UK provider to go bust. The Lancashire post reports that as many as 60 energy companies could collapse before the year is over, reducing the number of suppliers to as few as 10. And then the government will no doubt allow the prices to increase when it’s too late, by raising the cap after these companies have gone bust.

Martin Lewis, consumer champion, has criticised the government calling them short sighted. Allowing the energy sector to be decimated in this way will have long-term effects on the cost of energy, since good competition drives down prices.

Global Minimum Corporation Tax Imposed

Ireland scraps low corporation tax to fall in line with global peers according to City A.M. Ireland is set to hike its competitive corporate tax rate from 12.5% to 15%, as the country signs up to the global tax reform. The G-7 and G-20 nations agreed earlier this summer to join forces to tackle tax avoidance and harmonize rules across the globe.

Almost 140 countries have taken a decisive step towards forcing the world’s biggest companies to pay more tax, with plans for a global minimum corporate tax rate of 15% to be imposed by 2023.

While many will rejoice, this is bad news for the consumer as price rises will surely follow.

The Republic of Ireland had one of the most attractive rates for corporations in the world at 12.5% and had, until now, refused to join the plan. Its low tax rate had previously drawn in tech giants like Apple and Facebook, who both centre their European operations there. Despite the tax hike in Ireland, it still leaves their tax rate significantly better than in the UK, which is set to rise to 25%.

We here at Money Unshackled have long campaigned for low corporation tax here in the UK, arguing that it attracts the biggest and best companies and encourages entrepreneurship. Ireland has been a shining example of this. As an outsider looking in it would seem that Ireland has been coerced by more powerful countries to conform to their will.

If this was a company working with another company in cahoots to set prices it would be labelled as collusion and would be illegal. Seems like collusion isn’t criminal when it’s between governments.

JPMorgan Chase Launches In Britain

In less depressing news, US bank JPMorgan Chase has just launched in Britain with an online current account. According to CNBC, it marks the first international expansion of JPMorgan’s consumer bank brand in its 222-year history.

It offers customers 1% cashback on most spending for a year, 5% interest on savings made when you round-up purchases, and fee-free debit card use abroad. Although 5% interest sounds epic don’t get too excited about this particular feature. The fact that it only applies to round-ups means you’ll be getting 5% on next to nothing, not your entire savings.

It’s hard to care about current accounts as they are all so similar, but at launch, JPMorgan Chase do seem to be attempting to disrupt the market with some industry leading features. It’s fee-free debit card use abroad will be much appreciated now that travel is opening up again, and it also gives you the ability to split your current account cash into different ‘jars’, which we think is an awesome feature.

These jars have their own separate current account number, and you can use your debit card to spend from the account of your choice by selecting which account to use via the app when you make payments. The idea is to help people with budgeting and saving. We both currently use spreadsheets, and this might be perhaps the first time we can close the spreadsheet for good.

Average Salary at Vanguard Revealed

If you’ve been thinking of a career change recently then you might want to consider applying for a job at Vanguard. According to efinancialcareers, the average pay per head for the 510 employees in Vanguard’s European business is £195k. This was an increase on the £160k average per head that Vanguard paid in the previous year. If anyone from Vanguard is watching, note we are both available… part time only of course.

Crypto Hamster Beats The World’s Top Investor

A crypto-trading HAMSTER is now beating the world’s top investor Warren Buffett and the S&P 500. Since June, the hamster is up by about 20%. The Germany-based anonymous owner of the furry investor describes him as the “world’s first crypto hamster”.

The hamster runs on an “intention wheel” that chooses one of 30 different cryptocurrencies to trade, and the buy or sell decision is determined when the hamster runs through one of two “decision tunnels”. Special thanks to The Sun for this important news.

Stock Market To Fall 5-10%

In stock market news, Deutsche Bank predicts a 5-10% stock market correction before the year end, reports Yahoo Finance. In the lender’s latest survey of more than 550 market professionals, it found that 58% of respondents forecast a change of up to 10%, a cautious sign that the bull run could come to an end.

The survey, which was conducted between 7 and 9 September, found that the biggest risk to the current relative market stability was new variants of COVID-19 that bypass vaccines, with 53% of those surveyed most concerned about this factor. This was followed by concerns over higher-than-expected inflation, weaker-than-expected economic growth, a central bank policy error, and waning vaccine efficacy.

Other causes for concern included geopolitics, fiscal policy being tightened too quickly, a tech bubble bursting and worries about the debt burden. In short, there seems to be a hell of lot to be worried about right now, but as always, we will be continuing to drip feed as much as we can into the market and riding out any temporary declines.

Britain’s Rental Sector Shrinks By £5bn

In property news, Britain’s total rent bill falls by £5bn despite rising rental prices, as millennials jump on the housing ladder… and Gen Z stays at home with Mum and Dad, reports thisismoney.

As everyone is already aware, individual rents have been massively increasing, but in what is some very surprising news, the total rental market across Great Britain fell by 8% to £57.3billion in 2021, down from a peak of £62.4billion in 2018, according to new research by Hamptons International.

This chart shows the total amount of rent paid by each generation by year. Millennials (that’s those born between 1980 and 1996) dominate the rental market right now but is dropping sharply as they start to buy their own homes. However, the problem is that Generation Z (that’s those born between 1997-2012) are not replacing them fast enough causing the rental market to shrink. Generation Z may skip renting altogether and only fly the nest to buy. The rental sector is likely to continue shrinking as a result.

We’re both shocked by this shrinking rental market as we had just assumed that it must be growing due to an increasing population and extreme difficulty of buying. What doesn’t come as a surprise though is that individual rents continue to rise, increasing 7.4% in August compared to the same month in 2020.

Twitch Hack Reveals Earnings Of Streamers

A recent Twitch hack has revealed how much revenue the platform’s biggest streamers make. Twitch, the videogame streaming platform owned by Amazon suffered a data breach, with information leaked online.

Streamers on Twitch typically generate revenue through advertising, sponsorships and tips from viewers upon achieving certain viewership metrics. Twitch also cuts special deals with its most popular streamers for additional income.

It has been revealed that a Twitch channel called Critical Role is the service’s number one earner, raking in $9.6m (£7.1m). Not bad for playing some computer games.

However, don’t quit your day job just yet. According to the Washington Post, many of the listed top streamers make less than minimum wage. While the big names do indeed make millions of dollars, further down the list of Twitch’s top 10,000 highest paid streamers, payouts drop off steeply, to the point that many are not even making a liveable wage off Twitch alone.

10,000 streamers might sound like a big list and something that you could break into but there are around 9 million streamers on Twitch, so your chances of breaking into the very top ranks are slim at best.

Rishi Sunak Plans To Lower Student Loan Repayment Threshold

Students face huge loan repayments as Rishi Sunak is considering plans to slash the salary threshold for when repayments begin, reports the Daily Mail. Repayments would change from the current £27,295 to £23,000. The National Union of Students said it would be ‘totally opposed’ to such a reduction.

The current student loan system is a farce. Most former students who started uni after 2012 will never pay back their loans due to low earnings and the fact that the average student now graduates owing in the region of £45,000. The government estimates that more than half of the loans will never be paid back. As such, student loans should be considered a tax on education rather than a normal loan.

However, a retrospective alteration to the terms of the repayment threshold would save the Treasury as much as £2billion a year and would cost graduates an additional £386 per year. The NUS said to the Financial Times, ‘The injustice is simply astounding.’

We can’t see how such action can even be legal. Millions of students have taken out student loans based on a set of agreed-upon terms. In no other commercial arrangement can the terms be changed at a later date, so why on earth do the government think this is even a possibility?

How do you plan to make your millions? Will you be following the Crypto Hamster, streaming games on Twitch, or getting a job at Vanguard? Join the conversation in the comments below.

Written by Andy

 

Featured image credit: Dmitry Nikolaev/Shutterstock.com

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday:

Boris Delivers Tax Blow | House Prices Going Mental | Brits Are Unprepared For Next Crisis

Welcome to MU News. Today’s financial headlines:

  • Boris Johnson U-turns again by breaking Conservative manifesto pledge not to increase national insurance, income tax or VAT.
  • Average UK house price hits eye-watering eight times average salary.
  • Mortgage price war ramps up as Nationwide offers record breaking sub 1% five-year fixed rate deal.
  • Lloyds Bank plans big move into the UK rental market by becoming the UK’s biggest landlord with 50,000 homes.
  • Contactless card payment limit to increase to £100 from October. Expect it to be a ‘thief’s dream’.
  • James Dyson is telling you to get back to work. Dyson says that working from home makes firms less competitive.
  • The UK’s finance watchdog declares Binance is ‘not capable’ of being supervised.
  • The Royal Mint has recorded a fivefold rise in young adults taking a stake in Gold. Is it time to protect yourself against inflation?
  • Interactive Investor lines up banks for blockbuster London flotation.
  • And finally, the UK faces a £371bn savings shortfall.

In today’s episode we’re trying something new. We’ve gathered all the latest money news from the past few weeks that matter most to your finances. If you find this financial news bulletin useful then hit that like button and let us know down in the comments. Let’s check it out…

Don’t forget to check out the Money Unshackled Offers page where you’ll find free stocks, hundreds of pounds of free cash in welcome offers, and discounted memberships to stock analysis tools like Stockopedia.

Stockopedia will help you pick stocks like a pro, and with this offer link you’ll get a free 14-day trial followed by a 25% discount.

Watch The Video Here > > >

Written by Andy

 

Featured image credit: andrewvect/Shutterstock.com

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday: