November 2022

With so much happened, and happening, with our political system in the UK over the last quarter, I hope you will forgive me for wondering where to start with our regular updates of this page.

The new Prime Minister, Rishi Sunak MP, along with the new Chancellor, Jeremy Hunt MP, both now have their feet under the table of power and have got busy quickly. They needed too.

The Chancellor's announcements planned for 17 November 2022 have now become a full fiscal statement. This date was put back approximately two weeks following the second change in Prime Minister, and the almost total unwinding of the previous mini budget

Noting the other changes already announced to cap energy costs, all these measures will require a large increase in government borrowing. This at one point led to concern about the UK's ability to meet this debt, in turn leading to the value of the pound falling and the cost of UK government borrowing increasing significantly. Sterling reached an all-time low against the US dollar of just over $1.03 on 26 September, although it has stabilised at the time of writing (14 November 2022) to around $1.18.

It is noteworthy that net public sector debt has consistently run over the last year or so at approximately 95/96% of UK GDP (gross domestic product) and some will not want to see this level (and its associated interest costs) rise.

With the Ofgem price 'cap' due to be renewed (and elevated) on 01 October, and then again on 01 January 2023 (expected average cost to reach £4,200 per annum before any new unit price capping is applied), this coming winter looks a bit bleak to say the least.

As an aside, some households indicate that they will just ignore the situation, perhaps settling down to the football feast of the World Cup starting in November and ending close to Christmas. But, for borrowers and deposit savers, there are other points to consider.

Bank of England base rates

We had a base rate decision in October from the Bank of England (BoE), and it was a big jump up again. The base interest rate has now reached 3.00% and is expected to climb higher, perhaps quicker, possibly to 3.5-4.0% or so, although this is not guaranteed. The BoE has now also talked widely about an economic recession in the UK towards the end of this year and for all of 2023. There are grades of recession, so it might be mild-ish (see our blog regarding grades of recession), but still somewhat painful for many households. Indeed, when statistics are collated and released, we may already be part way into recession.


This interest rate move is designed to reduce people's desire to borrow money, which they would spend, and so fuel inflation. We know that inflation (the CPI measure) reached 11.1% in October and is expected to continue to rise (BoE suggests now around 12% expected by December 2022 / beginning of 2023, based on current forecasts).

Understandably, some UK households dealt with soaring living costs and falling real wages by borrowing more on credit cards. The Bank of England reported that individuals added an extra £1bn in credit card debt in June 2022, noting that credit card borrowing grew at the fastest pace since 2005, while the amount deposited in bank accounts fell sharply. As you can see, households are bridging the gap between incomes and ever-growing expenses.

Markets factor in most things

Turning to the current market position, many individuals may refer to the value of their pension or ISA arrangements. We all know that the value of funds can fall as well as rise, and we have seen some significant volatility this year. Volatility is not uncommon, and this can be triggered by events, such as war, as sadly we have seen in Ukraine.

The key point here is that, if we think something is happening (such as an approaching recession), the markets have usually factored in the effects. Looking at the markets on 14 November, in comparison to a year ago, we find the following:


Position now / 14 November 2022

15 November 2021






FTSE All Share




Dow Jones (US)




CAC 40 (France)




Dax 30 (Germany)




Market values can fall as well as rise and this is only a snapshot in time. However, what might this indicate? First of all, we are not alone in having economic headwinds, with some faring better than others. Also, that any recession might be 18 months or so in duration, but perhaps not deep. So, perhaps miserable for a year or so, but we believe not catastrophic, unless things change again.

Pay attention please

The forthcoming autumn and winter months have been described by one financial pundit as a crisis into which the UK is sleep-walking. We would note that many of the economic factors that are combining do not read well, with perhaps a 'winter of discontent' ahead, as we saw in the late 1970s.

Checking and reviewing all your financial arrangements is always recommended, but perhaps this autumn, more than ever. The Bank of England is suggesting that the coming economic environment will last 18 months or so, so being ready at the start is likely to be a far better position than addressing any financial issues at hand later. Please be ready.

Keith Churchouse FPFS
CFP Chartered FCSI
Chartered Financial Planner

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