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Daniel English

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Email: daniel@contadoraccountancy.co.uk

Louise Rogers

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Economic Factors affecting Business - Part 5

August 26, 2019

 

Here is a short series looking at economic factors that have an impact on business, elements that are beyond the control of your business which you should be aware of - and keeping an eye on. There are also a few links to information sources.

 

Part 5 - Financial Markets

 

The financial markets are not just for the investors - most consumers are investors in the stock markets, many are not aware or that concerned about it because it is through their pensions.

 

Now that consumers can draw down 25% of their private pension funds, tax free, at the age of 55 years (this age is increasing) the performance of the financial markets really matters.

 

The Hargreaves Lansdown website provides a live tracking tool for the global financial markets. Investment of pensions and saving in the financial markets is a long term option, this 10 year graph shows this: 

 

The shorter term economic impact on business comes in two forms, firstly if a consumer is watching their savings fund take the rocky road that we have seen over the past three years:

 

It has an impact on their "consumer confidence" - Secondly a £300,000 pension fund attracts a tax free lump of £75k at the age of 55. A negative swing can drop the fund and therefore the amount that can be drawn out.

 

We know the advice is not to spend the pension lump sums, but many funds are used to clear mortgages, freeing monthly commitments which in turn increases disposable income. They are also used for home improvements, holidays and cars!

 

 

 

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