And how to avoid the whale

Last year’s Spring Statement was the first following the move of the main budget to the autumn. It was, as expected, a relatively low-key affair, in which the Chancellor provided updates on the economy and little else. Nevertheless, being the first it received plenty of press coverage. But this year? Did you even notice it had happened?

The Spring Statement 2019 was something of a Jonah, wholly consumed by the whale of Brexit. Being sandwiched between the second meaningful vote on the Withdrawal Agreement and the votes on the so-called ‘no-deal option’ no-one was at all interested. In the Biblical story Jonah is regurgitated by the whale three days later, so maybe in this weekend’s press we might get something.

So what was actually in this year’s Statement? The Office for Budget Responsibility (OBR) now expects growth to be 1.2% in 2019, down from October’s 1.6% projection. The Chancellor was able to tell MPs that “public finances are in their strongest shape in 17 years” but he, not unexpectedly, resisted the urge to spend. Government borrowing will be £3bn lower than October’s projection while debt will drop to 73% of GDP by 2023/24.

Those are the OBR’s forecasts, and aside from that there is little else to comment on. An extra £100m of funding to tackle knife crime and a £3bn scheme to build 30,000 affordable homes.

Mr Hammond told us that a spending review will be launched if a Brexit deal is reached in the coming weeks. The spending review will decide how much of the ‘deal dividend’ the Government can “prudently release”. Now, I don’t want to sound cynical but if “public finances are in their strongest shape in 17 years”, how is that a ‘deal dividend’ when a deal has yet to be achieved?

I’m not going to make any further comment on the Spring Statement – whatever happens on 29th March I predict an emergency budget of some kind in the summer, so we can take a closer look when it happens.

So, having avoided the B word for almost 36 months I can resist no longer, and will turn to Brexit now. To say all is in turmoil is a serious understatement, and no-one can know what lies in wait for us in the coming weeks. It may of course not be weeks – it looks like some kind of extension to the Article 50 process is on the cards, whether that will be just a month or two, or a much longer affair. There will inevitably by more upset, turbulence, volatility in the markets and wild currency fluctuations. Every morsel of good news and every hint of bad news will be seized upon, and over-reacted to. So, at the risk of sounding like a broken record I will return to the subject of my January article, which I called The V-Shaped Market.

I wrote then of market volatility and how, when a diversified portfolio of investments loses value, it always, eventually, recovers and goes on to improve. Major events do cause upset and volatility, but this also presents opportunity. The most important thing is not to react. Sit it out and await the recovery, for attempting to avoid the falls will also mean actually avoiding the recovery.

If you haven’t already, go back and read my January article, which you can find here. The fundamental message is always the same, and is certainly no different now during this Brexit situation we find ourselves in. Diversification, proper planning and taking the long-term view is the correct strategy, and by following it we can avoid the whale.


Philip Chandler FPFS, CFPTM, Chartered MCSI

Chair of Aspinalls Technical and Investment Committee