Please note the political opinions expressed below are those of the author himself, and do not necessarily reflect the opinions of JP Fund Services AS.
For a long time now, I’ve been warning that the UK economy was heading for trouble, and sadly, the evidence is now all around us.
What was once a strong, confident nation has been slipping further and further into decline, and the uncomfortable truth is that the leadership of the country has simply failed to face reality. For those of us old enough to remember the 1970s-and I was already working in the capital markets then-the parallels today are striking and worrying.
We could soon be back where we were in 1976: Britain, cap in hand, going to the International Monetary Fund (IMF) for help. Imagine that. A G7 economy reduced to asking for emergency support. It hasn’t happened in almost 50 years, and yet here we are, right on the brink again. On top of that, the UK is now paying more in interest on its debt than any other G7 country, and, incredibly, even more than so-called “fragile” eurozone economies like Spain, Italy and Greece. It’s embarrassing.
Now, a lot of commentators like to compare this moment with the 1970s, and most of them are right to do so. But I lived through it – I remember the strikes, the inflation, the IMF bailout. And I can tell you: it didn’t suddenly get better after the IMF stepped in. Quite the opposite. Things got a lot worse before they improved. It wasn’t until Margaret Thatcher came to power in 1979, and after years of very painful reform, that the UK really began to find its footing again. That’s the sort of timeline we might be looking at. A long haul, not a quick fix.
And please – let’s kill this nonsense that Brexit is the root cause of everything. That’s just lazy thinking. The real problem has been decades of bad policy and governments unwilling to live within their means.
The disaster of the 1970s came from a Labour government run ragged by union demands and ideological backbenchers. And when Labour returned in 1997, Tony Blair’s government decided to dump fiscal prudence overboard and start spending like there was no tomorrow. That was the start of the rot. If we’re honest, a straight line can be drawn from those years to where we are now.
But I don’t want to make this sound like nothing but doom and gloom. Because one of the ironies of all this is that volatility brings opportunity. Back in the late ’70s and early ’80s, I did some of my best work in the markets. The same was true in the early 2000s. When economies stumble, markets don’t stop-they move faster. And if you know how to position yourself, that movement creates possibilities. The difference today is that ordinary investors have far more tools at their disposal. Back then, if you wanted to trade internationally, you were stuck with telex machines (younger readers may have to Google those). Now, with the internet, you can trade globally in seconds. The playing field has never been more open.
Still, the months ahead are going to be rough. As I said at the start of the summer, I didn’t expect a strong autumn for markets, and nothing has changed my mind. Inflation is sticky, growth is flat, and governments are drowning in debt-it’s not just the UK, it’s across Europe and beyond. The best approach right now? Keep trading horizons short, stay diversified, and don’t chase stories that sound too good to be true.
One last thought, especially for younger readers who’ve grown up in the tech boom: technology won’t save the economy on its own. In the 1970s, computers began appearing in offices, and in the late 1990s the internet took off. Neither stopped recessions. Go further back: the railway boom and the arrival of radio in the 1920s didn’t prevent the Wall Street Crash of 1929. If anything, speculative bubbles in “hot” industries can actually make crashes worse. So, while AI and other high-tech advances are exciting, don’t think they’re a magic shield against downturns. They’re not.
The truth is, governments eventually pay the price for overspending, and economies always move in cycles. But for investors, this isn’t all bad news. With discipline, knowledge, and a cool head, tough times can be just as profitable as good times.
Yes – the UK is facing another nightmare, maybe its worst in decades, and other countries are in a similar situation. But where there’s danger, there’s also opportunity.
Finally, on a personal note.
Some of you may have noticed that my reports in recent months have focused more on the big picture rather than providing shorter-term trading ideas, such as those technical observations we share in our weekly Chartbook. The reason is simple: I have been forced to spend much of this year in the UK dealing with family matters, which sadly led to the recent loss of my beloved sister.
It has been a difficult period, and my focus has, understandably, been pulled away from the markets. I do hope that in the weeks ahead I can get back on track and spend more time doing what I love – analysing markets, spotting opportunities, and sharing ideas with you.
In the meantime, I would like to take this opportunity to thank my colleagues at SGT and JPFS for their patience, their support, and their friendship. It has meant a great deal.
The post The UK Nightmare Returns first appeared on JP Fund Services.
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