This year has certainly been an eventful one! With a jubilee, a new monarch and two new Prime Ministers there certainly has been a lot to talk about. We’ve had an exciting time at Ethical Futures too with some new staff and plans for the future. There’s a lot to cover, so let’s get into it.
A combination of factors from the Covid 19 pandemic to Brexit to the Russia – Ukraine conflict has seen inflation rise this year to around 11%. We’ve not only seen energy bills increase but also food and petrol prices which combined have been the cause of the ever present cost of living crisis.
Many workers are finding that their wages are not increasing at the same rate as inflation and are therefore finding it difficult to pay their living costs. For many this has been a reason to strike with 2022 seeing strike action from rail workers, postal workers and teachers and threats of strike action from nurses and paramedics.
The Office for Budget Responsibility estimates that we are nearing the peak for inflation rates and hope that the rates will begin to fall with a prediction that they will settle at 3.8% by Q4 of 2023. Source
There has been tension between Russia and Ukraine for many years with issues such as the annexation of Crimea and the war in Donbas. But the situation saw a major escalation with Russia’s invasion of Ukraine in February of 2022. At the time, President Putin referred to it as a ‘special military operation’ that he expected to only last a few weeks however, at the time of writing (December 2022), the war is still ongoing.
As a reaction to Russia’s invasion, many countries imposed sanctions on elements of the economy as well as a boycott on the purchase of Russian oil and gas. There was also a massive drive across Europe to welcome Ukrainian refugees fleeing the war.
Closer to home, after the excitement of the Platinum Jubilee over the summer, we unfortunately saw the passing of our longest serving monarch in September. Her Majesty Queen Elizabeth II died on the 8th of September at Balmoral Castle aged 96. The country entered a period of mourning which included the Queen lying in rest at St Giles’ Cathedral in Edinburgh before lying in state at Westminster Hall in London. Her death signalled the appointment of our new monarch King Charles III with Queen Consort Camilla. The Royal Mint have announced that 50p coins featuring King Charles are now in circulation, which will be odd to see as many of us will have only ever used money with the Queen’s face on.
Not only have we seen a change in monarch this year, but also a change in Prime Minister – twice! A tumultuous year in British politics saw Boris Johnson resign from the office of Prime Minister in July after three years in the position. The following leadership contest, that lasted roughly two months, saw the appointment of Liz Truss. But not for long! Truss cemented her place in history as not only the third female Prime Minister in our history but also the shortest serving as she resigned after only 50 days in power. The second leadership contest lasted only one week as Rishi Sunak put himself forward and faced no opponents.
She may have only been in power for 50 days but Liz Truss certainly left her mark on British politics! She quickly made changes to the cabinet with one notable appointment being Kwasi Kwarteng as Chancellor of the Exchequer. Together they announced their ‘mini-budget’, which has also been dubbed as ‘Trussonomics’. Using trickle-down economics as their theory of choice, the duo announced proposals including tax cuts, a reversal of the April 2022 increase to National Insurance and a two year freeze on household energy bills. The fallout of these proposals saw the pound sharply falling against the dollar, a loss of £300 billion on the stock market and an official statement from the International Monetary Fund stating that the budget was likely to increase inequality in the UK.
As a reaction to the negative response to the mini budget, Truss requested the resignation of Kwarteng and appointed Jeremey Hunt in his place. Hunt almost immediately reversed the proposals from the mini budget and set out his own plans for the economy.
All this means that we have had 4 chancellors, 3 Prime Ministers and 2 monarchs all in one year. This year is going to be a challenging one for pub quizzers in years to come!
We’re sure you’re well aware that uncertainty, due in part to the war in Ukraine and the political instability in the UK, has led to a tough year for investments. The important thing to remember is that there are always fluctuations in the market and that your investments can go down as well as up. Over longer terms, 10 – 15 years, economic movements tend to even out and sustainable and responsible investment has performed at least as well as or even outperformed conventional portfolios. Over the last five years, many of the funds we have recommended have significantly outperformed the market averages. Market volatility has eased as we reach the end of the year but we’re not out of the woods yet. If you have any concerns about your investments, please get in touch so we can put your mind at ease (remember your adviser’s email will be their first name followed by @ethicalfutures.co.uk).
This summer saw the UK’s highest ever temperature of 40.3° in Lincolnshire and a high of 34.8° in the Scottish borders. But the record for highest temperature goes to Sacramento, California with a high of 46.8°. The record temperatures across the world this year highlight the climate crisis that our planet is experiencing. Alongside heatwaves, we also saw record incidences of wild fires and flooding. And it looks like we’re heading into a very cold winter. This only further proves the importance of ethical and sustainable investing to help combat the crisis.
Thankfully 2022 saw another meeting of the Conference of the Parties. COP 27 was held in November in Sharm El Sheikh, Egypt. The main outcome of the conference seems to be the proposal for a ‘loss and damage’ fund. The idea being that those who create the majority of the emissions that are causing the climate crisis should pay to help the less developed nations who are being impacted by climate events. However, we are still to see an agreement that will see fossil fuels being phased out.
We are continuing to see a growing interest in sustainable and responsible investment. This growth has been acknowledged by the FCA who have released a consultation paper regarding the ways in which funds are labelled and described. Greenwashing has become an issue in financial services in recent years as it involves the use of unsubstantiated claims that deceive the consumer into believing that a product has a more positive impact than it actually does. As ethical financial planners, we are passionate about the eradication of greenwashing to ensure that everyone who wants to invest in an ethical manner can do so with confidence that their money is making a difference.
The proposed labels are:
- Sustainable focus:-
This will be used to label funds that invest in environmentally or socially sustainable assets.
- Sustainable improvers :-
This will used to label funds that aim to improve the environmental or social sustainability of their assets over time.
- Sustainable impact:-
This will be used to label funds that are investing in solutions to environmental or social problems in order to create a positive, measurable real-world impact.
We feel that the spectrum of investment is much broader than the labels suggest. These proposals are only a starting point for a regime that should aim to expand and evolve over time.
These fund labels are still at the consultation stage and the FCA hope to bring them into force by the middle of next year.
This year has been exciting for Ethical Futures as we have seen our team expand and strengthen. This summer saw the appointment of two new members of staff. First, Shane Presley joined us as a financial planner followed by Ellie Maletto as a paraplanner. They have both settled in to their roles and merged with the team really well.
You may have noticed an increase in communications over the last two years. This has been due to the appointment of Marian, our marketing and communications assistant. She joined us as an intern in 2020 and has recently been asked to stay on permanently. But our plans for expansion don’t end there! We’re still actively recruiting for our support team to ensure that we continue to provide the best service that we can.
And that, as they say, is a wrap. That was 2022 summed up in what we hope was quite a succinct manner. As we move into 2023, we want to wish all our clients and their families a happy festive season and we look forward to continuing to help you make your money change your world in the New Year.
It is important to take professional advice before making any decision relating to your personal finances. Information within this article does not provide individual tailored investment advice and is for guidance only. We cannot assume legal liability for any errors or omissions it might contain. Ethical Futures llp is authorised and regulated by the Financial Conduct Authority.