We are finally emerging from the worst of the impact of the pandemic. It is too early to determine just how much will have permanently changed but it will be one of the greatest peacetime changes ever. Working from home and in-store retail shopping are two obvious changes which will be permanently altered. It’s clear that there will be knock on consequences for commercial property and company profitability, unsurprisingly, analysts are split on the extent of the impact. I will try to give some ideas on two themes which most people have become aware.


Bitcoin and Cryptocurrency

The price of Bitcoin has rocketed in the past year and early investors have made a fortune. Recent investors have lost money as the price has fallen back. The attractions of this investment are that the total number of coins which will ever be produced is capped at 21 million. Currently there are around 19 million in existence and therefore the limited supply has in itself a powerful incentive to invest. In addition because it is not controlled by any government and cannot be tampered with in anyway, except by a majority vote, many people view it as safer than traditional currencies. It is regarded like digital gold. Interest has been fuelled by many successful technology investors such as the Tesla founder, Elon Musk. Recently there has been controversy because of several issues, particularly its use by criminals when looking for ransom money. Nearly all computer hackers want their ransom money paid with Bitcoin. The more pressing issue is the amount of energy being consumed to keep the Bitcoin infrastructure fully operational. The amount of energy is consumed greater than the sum total of Argentina’s national grid output. To make matters worse most of the energy is consumed in China and the electricity is largely sourced from coal powered electricity production. My view is that it is a distraction and if it were to be a real success it would be banned since governments would never allow the loss of control of their currencies. China has already effectively done this and has commenced a crackdown on miners within it’s borders.



This subject divides economists with many noting the recent upsurge both in the US and the UK. The concern is that the increase will cause interest rates to rise and stifle the economic recovery causing unemployment to rise. The two forces at work are the long term deflationary trend caused by continuing technology innovation and the short term upward pressure due to the dislocation resulting from the pandemic. So many goods and materials are now in short supply and most commodities have risen markedly. The question is whether central banks will raise interest rates to dampen inflation or if they will see past the short term and allow inflation the knowledge that the long term deflationary picture remains unaltered. In the US the chairman of the Federal Reserve, Jerome Powell, said “We’re not even thinking about thinking about raising interest rates”. With such forthright signals to the market from the US, I suspect that they will mostly adhere to the second option which means continuing ultra-low interest rates.



The UK Government is continuing to increase public spending and this trend is not sustainable indefinitely. The two options to address the deficit are to either reduce government spending or to increase taxation. The G7 countries have agreed a landmark deal to crackdown on tax avoidance schemes employed by large multinational companies which will hopefully be embraced by the G20. Some of the largest companies impacted by this have publically welcomed the change which should go some way to addressing the overall bill.  We know that for the duration of this parliament income tax and VAT will not change. However for those people saving via pension schemes the 40% tax relief is under threat and possibly the annual limit too. The same also applies to inheritance tax but it is unlikely that there will be any wealth tax. Thankfully no hint has been made about reviewing Business Relief which gives investors the ability to remove money entirely from their estate after a period of two years while retaining full access.


Housing Market

We appear to be experiencing a housing boom which has echoes of the last one. It is less extreme in absolute terms, but is strikingly similar in that it is disconnected from economic reality. It seems that Brexit, the sea border, impending end of furlough and the political mess we are in are not being reflected in prices. The market may defy gravity for a while longer but it cannot do so indefinitely. Current valuations make it difficult to purchase a house with a view to renting it out and making a reasonable return.


Stock Markets

There is much greater calm than was the case a year ago. Technology shares have fallen back recently but this has only a modest impact upon the UK as we have few large tech companies in the main market. One other positive aspect of the UK market is the beneficial impact of higher commodity prices. Some of the largest companies such as BP or Rio Tinto benefit and this is an advantage for this market compared to Asia or the US.


Stocks And Shares ISAs & Lifetime ISAs

Finally, the one certain thing is that ISA investments will continue to be tax efficient. Even if the limits are reduced in future the existing funds will not be affected. Therefore it is worth using up the full allowance of £20,000 if you have the available funds. After the next election income tax is likely to increase so better to be prepared now.

The current tax legislation permits investors between 18 and 40 to start a Lifetime ISA with a government bonus of 25% being added to contributions. They have lifted the penalty for withdrawing funds so investors simply pay back the tax as well as any growth achieved on the bonus. This means Lifetime ISAs should now be the default option for eligible investors.