Can you feel it? That is the sensation of the world slipping through your fingers.

The Great Financial Crisis, the housing crisis, Brexit, Covid, the cost-of-living crisis, the energy crisis. Any I forgot? It feels as if no matter what we do, we are all just keeping our heads above water.

If, like me, you came of age in the fire and brimstone of the Great Financial Crisis you might well wonder, has everything afterwards been just a total con?

You might have been a student during the turbulent Covid years, now condemned to massive student debt thinking, thinking where exactly did that get me?

Or you could be a parent who gets valuable child benefits while simultaneously being taxed to high heaven, thinking, can’t I just keep more of my own money? 

Maybe you’re the child of a baby boomer, watching them sitting on their pile of cash and home like Smaug and his gold, taking cruises and buying Range Rovers with your ‘inheritance’. 

Perhaps you feel you’ve worked hard to get to where you are today, but you’re crushed by the anxiety of what to do with it now you’ve got it. Least of all you want the Government pinching half of it for its mad pet projects.

And what about a 20-30-something who wants a family, but is locked out of the housing market by decades of bad policy from every political persuasion, vested interest and NIMBY psychopaths of your worst nightmares?

We all have a bone to pick with the system.

Dead-end job prospects. Stagnant pay. £15 olive oil. The Government taking half your money to pay people a ‘state’ ‘pension’ from a fictional ‘fund’ based on lies, damned lies and statistics. Fiddling while Rome burns.

The list of things that have arrived in the 21^st century to truly Screw…Us…Over…is growing by the day. 

We here at Mouthy Money are no longer going to take these affronts lying down anymore.

I’m not gonna leave you alone. I want you to get MAD! I don’t want you to protest. I don’t want you to riot – I don’t want you to write to your congressman, because I wouldn’t know what to tell you to write.

I don’t know what to do about the depression and the inflation and the Russians and the crime in the street. All I know is that first you’ve got to get mad. (shouting) You’ve got to say: ‘I’m a human being, god-dammit! My life has value!’ – Peter Finch in Network (1976).

So, from today, we’re tightening our focus. For those who want to build financial independence, we’re here to help you get rich, or die trying.*

And for those who have already built it, we’re here to help you decide how to protect well-earned wealth and spend it (and not be scared of ashamed of doing so either).

Why we’ve ended up here

Mouthy Money has been around since 2016, focused on telling people’s personal financial stories. We launched a podcast in October 2023, which has gone from strength to strength in the past year.

Increasingly though, and as Chris Tuite joined me as co-host, it has become clear that what really matters to us, and our audience, is that no one is looking out for our long-term financial health. 

Sure, financial firms do what they can. But Government institutions pay lip service, give and take small-time benefits, allowances or bonuses. Tax this, give that. It’s not enough.

The truth is no matter what your situation, there are tools there to help you get wealthier. To live the life you actually want to lead.

The system as it exists is not designed to screw you. What screws you is all the vested interests that come for their slice along the way. It’s time to stop those interests from winning.

From a high street bank that gives you a measly interest rate, to the insurer that hikes your premium without fail every year, or the private equity enterprise behind the vet that bills you for every penny any time your dog has a sniffle – we’ve had enough.

Mouthy Money is not here to break the system open. But we are now here to show you how to win against it and how to work with the companies that actually want to help you. And we might even try to change it for the better while we’re at it. 

Mouthy Money’s new manifesto

Mouthy Money is a money blog dedicated to speaking up about the importance of long-term wealth – how to build it; how to protect it; how to enjoy it.

We want to focus on real money issues and tackle the stigma around the importance of wealth and how people can achieve it responsibly and sustainably, by using the system as it exists to their benefit and promoting change from within.

Our mission is to provide essential information to readers: to help better inform and offer them the power to choose the right path for their own wealth growth, preservation and enjoyment.

We are a team of financial journalists with a deep pool of expertise and experience, from investing to pensions, mortgages, budgeting and more.

We’re very excited for this new chapter in our journey. Get in touch at editors@mouthymoney.co.uk if you’d like to be a part of it.

*When we say make you rich, we mean responsibly over time using legal methods. Don’t go getting any ideas!

The post We want to make you rich, but first you’ve got to get angry appeared first on Mouthy Money.

The term “economy” encompasses the intricate web of production, distribution, and consumption of goods and services within a country.

In the UK, the economy is a complex and dynamic entity influenced by numerous factors and stakeholders. This comprehensive guide delves into the key components that shape the UK’s economic landscape.

Gross Domestic Product (GDP)

At the heart of the UK economy is Gross Domestic Product (GDP). GDP measures the total value of all goods and services produced within the country over a specific period.

It serves as a primary indicator of economic health, reflecting the nation’s overall economic activity and growth.

When GDP is rising, it signifies a robust and expanding economy. Conversely, a declining GDP can indicate economic troubles.

Employment and the labour market

Employment rates and the labour market are critical in shaping the economy. Employment rates measure the percentage of the working-age population that is employed, providing insights into the health of the labour market.

High employment rates typically signal a thriving economy, as more people working means higher income levels and increased consumer spending. Conversely, high unemployment rates can be a red flag, indicating economic distress and reduced consumer spending power.

Wage growth reflects the changing income levels of the workforce, influencing overall economic stability and growth.

Inflation and the Consumer Price Index (CPI)

Inflation, measured by indices such as the Office for National Statistics (ONS) Consumer Price Index (CPI), tracks the average change in prices paid by consumers for goods and services over time. Inflation affects purchasing power and the cost of living, making it a critical economic indicator.

Moderate inflation is generally seen as a sign of a healthy economy, indicating demand for goods and services. However, excessive inflation can erode purchasing power, leading to economic instability, while deflation can signify weak demand and economic stagnation.

Public finances and Government spending

Public finances, encompassing government spending and taxation, significantly impacts the economy. The balance between Government income (primarily from taxes) and expenditure (on public services, infrastructure, etc.) influences economic activity.

Public debt, the total amount the UK Government owes to creditors, is another crucial factor. High levels of debt can limit the Government’s ability to spend on essential services and investments, potentially hampering economic growth.

Trade and balance of payments

Trade and the balance of payments are essential components of the economy. The UK’s trade in goods and services with other countries, represented by exports and imports, directly affects economic performance.

A trade deficit, where imports exceed exports, can be a concern as it may indicate a country is spending more on foreign goods than it is earning from its exports. Conversely, a trade surplus can boost the economy, reflecting strong foreign demand for domestic goods and services.

Monetary Policy and the Bank of England

Monetary policy, primarily managed by the Bank of England, involves controlling interest rates and money supply to influence economic activity.

By adjusting interest rates, the central bank can either encourage borrowing and spending (by lowering rates) or control inflation and reduce spending (by raising rates). This balancing act is crucial in maintaining economic stability and growth.

Financial Markets and the Stock Exchange

Financial markets, including the stock market and currency market, are integral to the economy. The performance of major indices such as the FTSE 100, which tracks the largest companies listed on the London Stock Exchange (LSE), provides insights into investor confidence and economic health.

The value of the British pound relative to other currencies affects trade competitiveness and foreign investment, further influencing economic conditions.

Photo Credits: Pexels

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Yesterday I watched a remarkable exchange on ITV’s Good Morning Britain. Martin Lewis, the doyen of personal finance in the UK, took a Labour politician to task over how the party plans to pay for the things it intends to do.

Jonathan Ashworth, the shadow paymaster general, was left thoroughly skewered by the veteran money journalist. He didn’t have a convincing answer when Lewis said:

“You can increase debt, which you’ve said you won’t do. You can print money, which would be inflationary. You put up taxes, which you’ve said you won’t do. Or you could cut spending, which you’ve said you won’t do, which means if you can’t do any of those, we’re living in fairytale land.

 “You are hoping to be in the next Government. We need to know from you which of those four options will you use to fill the black hole, because we know there is one there.”

This exchange struck me. There is much being left unsaid in this General Election campaign which Lewis, and many others, are starting to needle at. What do our politicians actually plan on doing?

In particular, as Lewis points out, our politicians are actively discounting the most obvious ways in which they might actually fix our broken economy, without having any real answer otherwise.

Economic predicament

Our predicament is this. The State (the British Government in this case) took on enormous amounts of debt in order to get us through the crisis of the pandemic. It then did the same again when we had an energy crisis and the onset of the war in Ukraine, to subsidise household bills.

This has left the national debt bill painfully high and means more of the Government’s income is forced into paying this down, and paying the interest on that debt, instead of things we actually want such as nurses or potholes filling in.

This is compounded by higher interest rates, caused by runaway inflation, which was itself caused by the Government racking up all that debt, and exacerbated by the energy crisis.

In orthodox economics there are a few ways in which you can get us out of this predicament, which Lewis alluded to in his questioning of Ashworth.

First, you grow the economy. This is a good solution because effectively you grow the economic ‘pie’ which the Government can then take a larger slice of (in taxes) without actually having to leave households with less themselves. People feel better off and the Government has more money. Win win.

But growing the economy becomes hard when you have highly regulated industries, poor productivity, a general lack of innovation and a lack of investment in new ideas. It is a puzzle we have failed to solve.

Evidence of this poor productivity is particularly stark currently, as workers are getting big pay rises, but aren’t producing more with their time. This, economists warn, is a possible cause of fresh inflation.

Liz Truss and Kwasi Kwarteng tried this method with deregulation, tax cuts and other giveaways, but the bond market hated the idea and rejected it, and they were kicked out of office before they had the chance to really try any of it.

The second choice is to hike taxes. This is easiest in the practical sense that the Government has all the tools, and the power at its disposal to simply increase taxes.

Now, the Government has been doing this to an extent already, through freezing of tax thresholds – which is called fiscal drag. Fiscal drag works as a backdoor tax hike because while you don’t increase the nominal tax thresholds, you allow inflation and wage rises to tip more workers into higher bands, thus earning more money from that higher band.

The reason the Government does this is because bare-faced tax rises are unpalatable, and generally make voters very unhappy. Indeed, they’re so unpalatable that no one wants to admit they’ll do it, despite the woeful situation.

Thirdly, you can cut costs. This is what the Government opted to do in 2010 in the ‘Coalition’ years when austerity was the name of the game. This is arguably now a radioactively toxic idea in political terms. Because of this, it’s very unlikely to happen in an open or obvious way.

If we look at what is actually happening now, it is ultimately a mixture of the three. The Government is paying as much lip service as it can to growth, which isn’t very forthcoming, while quietly increasing the tax burden, and trimming as much as it can from Government services without striking too much ire.

The problem with this is it is all half-baked. Growth is pathetic, taxes are at post-war highs and everything the Government touches feels as if it is crumbling. From the NHS to roads, schools to defence, it all feels very broken. So what do you do?

Read more from Edmund Greaves on Mouthy Money

Financial repression

There is a fourth option that no one really talks about, but I think is potentially what will happen once the dust settles on this election. That is something called financial repression.

Financial repression is a devious way of “fixing” a broken economy in our exact position. There are significant similarities with how our economy looks today, compared with how it looked after World War Two. Financial repression is what they did.

Firstly, you force investors to hold UK-based assets. You do this by limiting what capital (i.e. money) that can go abroad, so investors have to buy assets here. And when I say investors, I mean anyone with a pension pot, or any other kind of investment – a much bigger pool of people than you might imagine.

Then, you allow inflation to run higher than it should be over an extended period of time somewhere in the region of 4%.

By doing this, you don’t decrease the nominal amount of debt that the Government owes, but you do devalue it in inflationary terms, while increasing your tax take. This is because as inflation runs higher, people ask for bigger wage rises, which leads to more tax income and making the relative pile of debt look smaller.

So who loses in this situation? Anyone who is forced to hold local investments such as bonds or equities, which are priced in the local currency (pounds) and as such perform badly relative to higher inflation.

This notionally means anyone with a pension, but in practice it makes older people who have accrued larger investment pots over their working lives more susceptible, particularly as they will be more exposed to bonds which are the worst-affected asset in this scenario.

Now, is this a fantasy theory I’ve just concocted? No, it is already happening.

The current Government has said it is looking to force pension funds to hold more UK-based assets and Government debt. It has introduced new gimmicks such as the UK ISA to encourage investors to put more cash into local assets.

It has cut taxes (National Insurance) at a time when it isn’t really a good idea to do that, threatening to embed more inflation as a result. It already paid a lot of money to households to cover energy costs at a time when putting money into the economy was just going to cause more inflation.

There is one thing standing, theoretically, in the way of this situation – the Bank of England. The Bank has an inflation target of 2%. This means no matter what the Government does to try and stoke some inflation, the Bank will be there waiting to hike interest rates to combat this.

There are a few ways around this though.

The Bank of England is independent, and doesn’t take orders from the Government. But the Government does get to pick the Governor, so could put one in place that was more charitable to its aims.

The Government can also do some inflation stoking measures by the back door, beyond lowering some taxes. It can do this by bypassing the mainstream financial system and guaranteeing loans to businesses or even individuals that encourage spending which in turn stokes inflation.

It can also just make a bare-faced play to change the inflation target, something that is being openly discussed in policy circles.

Where next?

So where do we go from here? It’s good to look at history to see where we might be headed. Post-war financial repression carried on until the early 1970s, and largely did its job of making the war debt look smaller relative to the size of economy paying the bill for it. 

Once major capital controls were lifted by the Government, the movement of money abroad into better-performing assets by pension funds was stark, and fast, and helped to contribute to various crises in the 1970s which ultimately culminated in a radical Thatcher Government of the 1980s.

I do think that any Government with a mandate for the next five years, faced with a panoply of unpalatable decisions otherwise, is going to end up trying this option.

This is particularly because financial repression as a tool affects asset holders rather than workers and this is politically easier than the other choices (especially for certain political persuasions) because it is convoluted and sneaky, so easy to use to hoodwink voters.

The takeaway for anyone wondering how this will affect them is this:

• holding cash that doesn’t have inflation-beating interest rates will make you poorer
• holding UK-based assets, particularly bonds, will make you poorer
• not getting inflation matching or beating wage rises will make you poorer

How you beat these issues comes down to individual choices. I hope in writing this column it encourages you to ensure you’re well-prepared for what is coming.

Photo credits: Pexels

The post Financial repression is coming to ‘fix’ Britain’s broken economy appeared first on Mouthy Money.

Like so much else at the moment, the cost of motoring is accelerating rapidly. 

As well as sky-high fuel prices, drivers have to contend with ever-rising road taxes, congestion charges, insurance premiums, repair and servicing bills, and more. And while these costs keep going up, many of us are also having our incomes squeezed.

Of course, the authorities justify tax and duty rises on the basis that we need to cut pollution and help save the planet. That’s not much consolation, though, when you have to drive to work, get to the doctor’s or hospital, visit elderly relatives, or take the kids to school.

So today I thought I would share some tips and ideas for cutting your motoring costs…

1. Travel light

The more weight you carry around in your car, the worse the fuel economy is likely to be. So empty your boot as much as possible and remove the roof rack if you’re not using it. The latter will also aid fuel economy by reducing air resistance.

Find out more: If you’re 18 – 29, we want to hear from you! By taking our quick survey, you’ll be in with a chance of winning a £100 shopping voucher from your choice of Amazon, John Lewis or M&S – plus four £20 vouchers up for grabs too.

2. Check your tyres

Tyres under inflated by 15 psi – a difference you may not notice visually – can use 6% more fuel, according to the RAC. Not only that, but under-inflated tyres also wear out faster, meaning you will need to replace them sooner. 

You can check your tyre pressure at most filling stations or buy an electric pump. The correct pressure for your tyres will be in the owner’s manual or handbook.

3. Drive for fuel economy

There are lots of ways you can improve the fuel economy of your car. One of the best and simplest is to avoid braking and accelerating sharply. That means reading the road, anticipating changes in gradients and traffic conditions, and making any necessary adjustments in good time.

Another top tip is to keep your speed moderate. According to government statistics, driving at a steady 50 mph rather than 70 can improve fuel economy by 25%. For most cars the ‘sweet spot’ for fuel economy is between 50 and 60 mph. Once you get much over this, fuel economy falls rapidly.

Finally, having lots of electrical devices running – from heating to aircon – can reduce fuel economy as well, especially at lower speeds. So try to keep this to a minimum, but without of course compromising your comfort or safety.

4. Consider car sharing

Car sharing can work well if someone else you know is travelling the same route as you, ideally on a regular basis. You can split the fuel costs and (if you both agree) the driving duties. And as fans of Peter Kay’s Car Share will know, you can make new friends and enjoy some stimulating conversations as well!

For one-off journeys, you could try ridesharing. The website BlaBlaCar lets you search for other drivers who are making a similar journey and have space for you in their car. Alternatively, if you are planning a long journey, you can help defray the cost by offering to take one or more paying passengers. Fees are paid in advance via the website, so there is no awkward handing over of cash on the day.

There are also ‘carpool’ companies like ZipCar that offer members the opportunity to hire a car from their fleet when needed for a modest price. If you only require a car now and then, this could be a cost-effective alternative to owning a car yourself.

5. Shop Around for Motor Insurance

It’s easy to fall into the habit of renewing every year with the same insurer, but there are big savings to be made by shopping around. 

Use a price comparison service such as Go Compare or Confused.com to get quotes from a range of insurers, therefore. But also check cashback sites such as Topcashback and Quidco, which have some great offers too. For example, Topcashback currently have an exclusive £100 cashback deal on over-50s car insurance from Saga.

One other top tip is to get a quote for fully comprehensive insurance, even if you normally opt for third party, fire and theft (TPFT). Surprisingly, because of the way insurance companies’ algorithms work, comprehensive insurance often comes out cheaper, even though you are actually getting better cover.

I hope these tips help you cut your car-related costs in the months ahead. Happy motoring!

Nick Daws writes for Pounds and Sense, a UK personal finance blog aimed especially (though not exclusively) at over-fifties.

Photo by William Daigneault on Unsplash

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A record of over one million job vacancies have gone unfilled in the UK in the three months leading to August, according to the Office for National Statistics (ONS).

Job vacancies have reached over one million for the first time since 2001, and unemployment fell to 4.6% in the three months to July.

The wrong kind of jobs?

The jobs boom continued in August, with payroll employment up by 241,000 on the month to match pre-pandemic levels, according to data from HM Revenue & Customs (HMRC).

But Sarah Coles, personal finance analyst, Hargreaves Lansdown says that the jobs feeding into the market might be the ‘wrong’ kind of jobs, with a lack of workers to match with them

“There are over a million job vacancies washing around the UK, which sounds like exactly the right time to be coming off furlough and plunging back into the jobs market,” she says.

“The trouble is that they’re the wrong jobs, which spells trouble for both jobseekers and businesses.

“For these job hunters, it’s going to come as no comfort to learn that there are still actually fewer jobs in the economy than there were back in December 2019: this isn’t a boom time for jobs it’s a shortage of people to do them.”

Staff shortages

The ONS said the employment rate rose to 75.2%. However, Coles adds that the industry with most vacancies, with 75.4% to 57,600 jobs, was the accommodation and food sector.

She says: “Part of the problem with both is that the usual employees don’t want to work there anymore, and there aren’t enormous numbers of jobs seekers with the skills or the inclination to take the work on.”

Staff shortages can be seen:

• in transport firms that had to boost wages dramatically overnight to get drivers into the business
• retail companies
• health and care companies facing a huge squeeze in filling shifts, and are struggling to keep up services for vulnerable people
• accommodation and food companies that are running on empty

End of the furlough scheme

With the end of the furlough scheme, hundreds of thousands of people are now searching for new jobs.

The industries with the highest rates of furlough are:

• air travel (51%)
• travel and tour operators (46%)
• photography (35%)
• creative arts and entertainment (28%) 
• clothes manufacturers (26%)

Kitty Ussher, chief economist at the Institute of Directors (IoD) said to the Financial Times: “The economy is now well-prepared for the end of furlough. The challenge for government is to put its money where its mouth is and demonstrate in practice how we can fill vacancies by investing in our domestic workforce in a post-Brexit world.”

Photo by Marten Bjork on Unsplash

The post One million jobs to fill but are they the ‘wrong’ kind of jobs? appeared first on Mouthy Money.

LISTEN: Mouthy Money co-editor Edmund Greaves appears on talkRADIO to discuss why more older people are renting, how expensive your M&S shop on Ocado might be and whether switching to a four-day work week could save the economy and created half a million jobs. Listen in the Soundcloud player below.

With thanks to talkRADIO

Image courtesy of Marks & Spencer

The post LISTEN: Is M&S cheaper on Ocado, older renters, and could a four-day work week save the economy? appeared first on Mouthy Money.