There may be trouble ahead….still!/ Europe

With the first decade of Greece’s membership of the European Union (EU) upon us, the member states have to be commended for their hard work and recognition of the problems that this country finds itself in. It is good to see that the powerhouses of the EU, such as Germany and France, amongst others, are able to come together and find a solution to the debt problems that are now so apparent. With financial measures now agreed, it will be interesting to see if, in implementing these changes, they will be enough to control any contagion of default to other member states that find themselves with similar, if not larger, problems such as Portugal, Ireland / Italy and Spain ( together with Greece, unfortunately referred to as PIGS).

Many questions and answers lie ahead as to whether the financial measures agreed to help the Greek economy recover in an acceptable fashion, both to other EU states and the Greek people, will work. The major concern has been that as a state, Greece produces only approximately 2% (1.9%) of the EU’s overall GDP (Gross Domestic Product), which is obviously low. Their GDP deficit was over 10% in 2010 and public debt levels as a percentage of GDP at over 140% (142% in 2010). This raises the question of what happens if another larger EU state needs a similar financial solution and rescue?

Of the other countries already mentioned, using Italy in this example, this member state produces over 12% (approximately 12.7% of the EU’s GDP in 2010) and has a GDP deficit as a percentage of national GDP (4.6% in 2010) and levels of unemployment at 8.4% (2010). Their debt level is ‘only’ 119% (in 2010) and, as a further example, this compares to 80% debt level in the UK.

Default on national debt may have the effect of making debt costs rise in the Eurozone, making it likely that it would be more expensive for all countries to borrow funds to help their economies grow. This, in turn, may slow progress for member states out of recession, which most want to avoid. Time will tell if the measures agreed last week will be sufficient to meet the demands of the economies of the EU and I am sure many complications will appear in the coming months. There are many other global states and trading areas that rely on a strong Eurozone, and this is why it is important that these measures work into the future.

This blog is for information only and should not be seen or used as individual advice. Seek independent financial advice (IFA) for your own circumstances.

Churchouse Financial Planning Limited can help you with your own investment planning and asset allocation.

Keith Churchouse FPFS

Director of Churchouse Financial Planning Limited Chartered Financial Planner

ISO22222 Certified Financial Planner

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority

Extracts from our Summer Newsletter 2011

There are usually some tangible times in a calendar year when financial planning is noted in client’s diaries about what they need to undertake to maintain their overall planning strategy. The first more obvious date is the end of the tax year and to use up annual tax allowances, such as pension contributions or annual contributions to cash and/or stocks and shares ISAs, to name just two. Others find that the end of the calendar year, towards Christmas, is a time to consider family and issues such as inheritance tax planning, maybe using the annual gift allowances in the process.

Each client is different and has different objectives, therefore, this blog article should not be seen or used as individual advice.

Summer is a time when many relax a little and enjoy the sun and the warmth (or sometimes rain!) of the season. Many find this season a good time to review their financial planning, and I have provided a few notes below to give a prompt or two, if needed.


Proposed Financial Ombudsman Service award increase to £150,000

The Financial Services Authority (FSA) has been consulting on a proposal to increase the Ombudsman service award limit from £100,000 to £150,000, with a planned start date of 1 January 2012. The FSA made this proposal in order to prevent a decline in the consumer protection afforded by the award limit in real terms. This is to take account of the effects of inflation, which have certainly been more prevalent in recent times.

Following the consultation, the FSA plans to proceed with this increase, along with streamlining of their processes. They plan that these changes will maintain and contribute to increased confidence in financial services.

Implementation of Retail Distribution Review (RDR) End 2011

Some of you may know that the Financial Services Authority (FSA) has been working hard on the way that financial services is distributed in the UK. There has been some press on this topic and this is likely to grow over the coming months. The FSA’s work has taken much time and research, including consultations, and the final changes have been proposed and are likely to form the new regime starting at the end of 2012. As Chartered Financial Planners, we are well placed to meet these new requirements and to be able to continue to provide you with independent financial advice into 2012 and beyond.

One way we have demonstrated our commitment to providing high quality financial advice is to continue to be assessed for the British Standards ISO22222 Personal Financial Planning. My last assessment was in mid June 2011, my fourth year, and was passed successfully. At the end of June, I also studied and passed the Chartered Insurance Institutes Long Term Care exam, called CF8.

We will endeavour to keep you posted on the key changes that may affect you into the future once they are finalised.

Summary

I hope you have a great summer and I, and the team at Churchouse Financial Planning Limited, look forward to helping you with you financial planning over the rest of 2011 and into the year of the Olympics, 2012.

If you would like to review your asset allocation, investment planning, retirement or pension planning then please let us know and we can arrange a meeting to consider your current needs and aspirations.

If you would like to be added to our newsletter mailing list then please contact us for more information.

Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority.

Keith G Churchouse FPFS

Director, Churchouse Financial Planning Limited, Guildford, Surrey

ISO 22222 Certified Financial Planner