One can’t be blamed for trying to be optimistic at the start of a new year, but it looks like some new threats (and old ones, too) to economic recovery could be poised to make 2022 as challenging as years past.
This does not constitute advice and advice should be sought in all instances before acting on it.
COVID variants continue to keep us on our toes
The prominent variant at the moment is Omicron, which is highly contagious, and preventing a full return to normal that the world has been eager to restore for months.
Operating under pandemic restrictions is old hat for many, with businesses open and dental and medical practices resuming services as much as possible around vaccination targets and restrictions. However, a return to a full-blown lockdown might derail any progress the economy has been able to make. If not this one, another variant might pop up and be serious enough for the government to enforce restrictions again – which would cause more problems for businesses.
Rising inflation
A perfect storm of rising energy prices, labour shortages, and supply chain bottlenecks have all contributed to a rise in inflation. The Bank of England is expecting the annual cost of living increase to climb over 5% by the springtime. But this is something happening on a global scale and inflation increasing over these estimates is a real threat to worldwide economic recovery.
A financial crash
At the start of the pandemic, many rushed to sell of their assets (shares, bonds, and property) but since then asset prices have all risen. The housing market is flourishing and borrowing has never been easier since interest rates have hit rock bottom. On top of that, asset prices have received a lift after news that any policy changes would be gradual and limited. However, recovery has slowed and experts fear that policymakers might be pushed into drastic actions by higher than expected inflation and a crash could be imminent.
Time to review your plans
As has been the case over the last year or so, economic recovery is constantly evolving, changing from one moment to the next, so it’s hard to make any long-term plans. To be sure your finances can handle whatever comes our way, set aside some time to review your financial plan with your financial adviser. Get in touch with us today.
Need to tweak your financial plans?
Investments | Financial Planning | Retirement | Save Tax | Protection |
Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.