Spain, Greek misery and the Irish vote
Meanwhile the Olympic torch heads past FPC
As the UK heads towards the Diamond Jubilee weekend, most of the population will be focused on the progress of the Olympic torch and the prospect of an extended weekend!
But in Europe, all eyes are are focused on Spain, Greece and Ireland
Spain is under scrutiny, following the Spanish government decision to inject £15bn into its fourth largest bank, Bankia. Spain’s borrowing costs are now at 6.7%.
Today, we also see the Irish voting on whether to ratify the EU’s Fiscal Pact. The result may reflect another public outcry against austerity, but in reality with only 12 of the eurozone states needing to ratify it, the outcome is not necessarily critical.
What is critical is the emergence of a joint solution to reconcile the need to address the deficit with the desire to stimulate growth.
What does this mean for investors?
Short term equity falls may have been severe but this has been cushioned by the defensive elements of our portfolio’s so returns are simply flat. With minimal exposure to overseas debt, our portfolios are well diversified and have a global reach well beyond Europe.
We hold firm to our key principles – differentiate savings from investment, hold strong cash reserves and sit tight
For new investors the current conditions may represent a buying opportunity and some may be tempted to adopt a higher risk stance than they should. We urge caution and continue to incorporate a healthy dose of fixed interest in all new investment strategies and we encourage all investors to take a long term view.
The flatlining UK economy
Of great significance to all investors in the longer term is the pace of recovery in the US and Far East. We asked Peter Stanyer, our independent economist, to comment on our current plight and we encourage you to read his article A flatlining UK economy and the rollercoaster called Europe.
As always, do call us for clarification, or if you have any concerns. In the meantime however, enjoy the Bank Holiday celebrations!