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Experts are predicting that the UK will face a recession in 2023. While it can be tempting to react to this news by changing your investment strategy, sticking to your long-term plan makes sense for most investors. Read on to find out why.

Several factors are contributing to economic uncertainty, including high inflation and concerns about energy supply. The long-term effects of the Covid-19 pandemic and the ongoing war in Ukraine are two of the reasons for these challenges.

In its November report, the Bank of England said the economic outlook was “very challenging”. It expects the economy to be in “recession for a prolonged period”, adding that inflation was forecast to remain high until mid-2023 when it is expected to fall sharply. 

Other predictions also paint a gloomy picture of the UK economy. 

According to the EY ITEM Club, the economy will contract by around 0.2% each quarter from the final quarter of 2022 until the second quarter of 2023. Overall, it expects the economy to contract by 0.3% in 2023. This compares to a previous forecast that indicated the economy would grow by 1%. 

The organisation noted this is shallow when compared to previous recessions thanks, in part, to the government’s intervention on energy bills. 

Hywel Bell, EY UK chair, added: “There are very significant risks to the forecast, with the potential for further surprises or global instability creating additional drags on growth. Businesses will need to think very carefully about their resilience and plan for different scenarios, while also being mindful of the support they provide to their customers and employees.” 

Similarly, Goldman Sachs has downgraded its growth forecast for the UK, according to a Guardian report. The investment bank now expects the UK economy to shrink by 1% in 2023. 

A recession could lead to market volatility, but history indicates it recovers in the long term

While these predictions can be alarming to an investor, remember, that markets have recovered from previous downturns.

Economic uncertainty can lead to businesses and households tightening their belts, which has a knock-on effect on business profitability and markets. While it’s impossible to predict the markets, history shows us that they have recovered from recessions in the past. 

Take the 2008 financial crisis. In the UK, the recession that followed lasted for five consecutive quarters. During this time, the markets fell, but they went on to recover and grow. Investors that panicked and sold amid the downturn would have turned paper losses into real losses and missed out when markets began to rise. 

Over the next year, your investment portfolio may experience volatility or a fall in value. While all investments carry some risk, looking at how markets have responded to similar events over the long term in the past can give you confidence. 

If you’re tempted to make changes to your investments, here are five things you should do.

1. Focus on your long-term goals

As highlighted above, investment markets have historically delivered returns over the long term. Rather than responding to short-term economic challenges, focus on why you’re investing. 

2. Don’t make knee-jerk decisions

It can be easy to make knee-jerk decisions, especially during investment volatility. But the decisions you make can have a long-lasting effect, so it’s important that they are measured. Taking some time to weigh up the pros and cons can highlight where you could be making a mistake by reacting to short-term volatility. 

3. Review investments alongside your financial plan

Don’t think of your investments in isolation, they should play a role in your overall financial plan. So, if you’re tempted to make changes, review your options in the context of your wider finances and goals.

4. Consider your risk profile before you make changes

Before you make any investment decisions, you need to consider how they could change your risk profile. Choosing risk-appropriate investments is important. Taking too little risk could mean you don’t reach your goals, while taking too much could mean you’re exposed to more volatility. 

5. Speak to us

If you have any questions about the current economic situation or would like to discuss your investment plan, speak to one of our team. We’ll help you understand the effect on your lifestyle and your goals. Whether you want reassurance that your plans are still on track or you’re considering making changes to your investments, we’re here to help. 

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

While many tax allowances haven’t fallen, they haven’t increased in line with inflation either. In real terms, that means they’re less valuable than they once were. It could affect your income, long-term wealth, and what you leave behind for loved ones.

As the cost of living and the value of some assets rises, the tax breaks you use may not be stretching as far. It means your tax liability may have increased or that you need to review your financial plan.

As potential Inheritance Tax (IHT) bills consider the total value of your estate, the associated allowances can really highlight the effect of inflation. 

The nil-rate band would have increased by more than £135,000 if it matched inflation

The nil-rate band is the threshold for paying IHT. If the total value of your estate is below this, no IHT will be due.

For the 2022/23 tax year, it is £325,000. It’s remained at this level for 13 years. However, according to a report in the Telegraph, if the allowance had kept pace with inflation, it would be worth more than £462,000 today. It would mean that families could leave loved ones more than £135,000 extra without having to worry about IHT.

Yet, while the allowance has been frozen for more than a decade, many of the assets you want to leave behind are likely to have increased in value significantly. 

According to the Land Registry, at the start of 2009, the average home in the UK was worth almost £158,000. 13 years later, the average property price had risen to almost £275,000. As a result, property alone will now use up a significant proportion of the nil-rate band.

If you’re leaving some property, including your main home, to children or grandchildren, you can take advantage of the residence nil-rate band to increase how much you could pass on free from IHT. For the 2022/23 tax year, this is £175,000.

However, both the nil-rate band and residence nil-rate band are frozen until 2028. So, in the current high inflation environment, the value these allowances provide in real terms is likely to fall.

Many of the allowances you can use to pass on assets during your lifetime to reduce IHT haven’t increased either. Assets may be considered part of your estate for up to seven years for IHT purposes, so these allowances could be a vital part of your financial plan.

Among those that haven’t increased are: 

  • The annual exemption means you can pass on up to £3,000 worth of assets each tax year without the sum potentially being added to the value of your estate. However, if it had increased in line with inflation, it would be more than £10,000 today.
  • Parents can gift their children up to £5,000 on their wedding day without considering IHT. If this allowance had increased at the same pace as inflation, it would be worth almost £35,000 in 2022.

So, while the allowances you make use of may not have changed, the value they add to your financial plan could have fallen. 

It’s not just IHT where frozen allowances could be affecting your wealth and tax liability either. 

3 other allowances that may not be as valuable due to inflation

1. Income Tax thresholds

While the Personal Allowance threshold has increased significantly over the last decade, the higher- and additional-rate Income Tax thresholds haven’t increased at the same rate of inflation. As a result, if your salary has risen, your tax liability is likely to have risen too. 

According to Quilter, if Income Tax thresholds remained frozen for the next five years, someone earning £35,000 would be around £2,000 worse off over the five years. For someone earning £50,000, this rises to more than £9,000. 

During the autumn statement, chancellor Jeremy Hunt announced the income for paying the additional rate of Income Tax would fall from £150,000 to £125,140 in the 2023/24 tax year. As a result, high earners may see their tax liability increase. 

2. Dividend Allowance

Dividends can be a way to boost your income. If you’re a company owner, you may choose to take dividends as payment to supplement a salary, or you may invest in dividend-paying companies.

For the 2022/23 tax year, you can take up to £2,000 in dividends before tax is due. This compares to an allowance of £5,000 a decade ago. Once you factor in inflation, the value the Dividend Allowance offers falls even more sharply.

The Dividend Allowance will fall to £1,000 in 2023/24 and to £500 in 2024/25.  

3. Pension allowances

Both the Lifetime Allowance and Annual Allowance have fallen in the last decade. Again, when you consider inflation, the reduction in value becomes even starker and it could have a significant effect on your retirement savings.

The Annual Allowance limits how much can be added to your pension during a tax year while retaining tax relief. For the 2022/23 tax year, the maximum Annual Allowance is £40,000, and some savers may have a lower allowance. This compares to a maximum allowance of £50,000 in 2012/13.

Similarly, the Lifetime Allowance, which caps the total value your pension can be while retaining tax efficiency benefits, fell from £1,500,000 in 2012/13 to £1,073,100 in 2022/23. 

Making inflation part of your financial plan

When you are making long-term plans, inflation is important to consider. From the value of allowances to how to manage your savings, the rising cost of living may affect your decisions.

Please get in touch with us to discuss how to make inflation part of your decision-making process.

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate or tax planning. 

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

When you’re thinking about your financial plan, what are your priorities? Often, passing on wealth and helping children or grandchildren realise their own goals is important. 

Despite a period of economic uncertainty, a survey from Scottish Widows found that 77% of UK households are still planning for the financial wellbeing of other generations. This could include children and grandchildren, as well as older relatives that may need additional support. 

If you want to focus on creating long-term financial security for your family, here are seven important steps to take. 

1. Build up your emergency fund

To achieve long-term financial security, you need to have a solid foundation. If you don’t already have an emergency fund, it’s a good place to start.

Having three to six months of expenses in an easy access account can provide a safety net if your income temporarily stops or you face a bill. It can help ensure you can continue to meet financial commitments even if the unexpected happens, including things like contributing to a nest egg for your child’s future. 

An HSBC study found that the average emergency fund balance is £7,606. However, 18% of people had £1,000 or less. 

You should go through your budget to calculate a target for your rainy day fund. 

2. Assess if financial protection could provide peace of mind

Unexpected financial shocks can knock even the best-laid plans off course. An emergency fund can provide some peace of mind, but for larger shocks, financial protection can be useful.

Depending on the type of financial protection you pick, it could pay out if you’re unable to work due to an accident or if you’re diagnosed with a critical illness. Other options, such as life insurance, could provide your family with money if you pass away. 

Appropriate financial protection can help your family manage their finances even if the worst happens. 

3. Start saving on your child’s behalf

It’s never too soon to start building a nest egg for your child. 

If you start putting money away while they’re still young, it has longer to earn interest. It can also make regular contributions part of your budget and more manageable. 

A nest egg can help children start engaging with money and understand why saving is important from an early age. It could also support their goals, such as going to university or buying their first car.

One thing you need to consider is what type of account to choose. An easy access children’s account can be valuable if you want to use the money in the short or medium term. In contrast, they wouldn’t be able to access the money saved in a Junior ISA (JISA) until they were 18. 

4. Consider investing for their future

If you want to save for your child with a long-term view, investing could make sense. 

While returns cannot be guaranteed, investing could provide you with a way to grow the nest egg you’re building. It could be an option to consider if you have a goal in mind that’s further than five years away, such as helping them to buy a home.

When investing, it’s important to understand the risks and to choose options that are right for your risk profile. 

5. Talk about finances with your family

Helping your children financially doesn’t have to mean giving them money – knowledge can be invaluable too.

Talking about finances can be really useful. From discussing saving pocket money with young children to helping adult children navigate saving into a pension, simply having someone to discuss finances with can help create long-term financial security.

It’s an approach that can mean they make better decisions and are comfortable seeking support if they need it.

6. Write your will and commit to reviewing it

Writing a will is the only way to ensure your assets are passed on to who you want. Don’t assume your wealth will automatically go to your children, as this isn’t always the case. 

A will means you can set out who you want to benefit from your estate and specify what you’d like them to receive. 

While you can write your own will, it’s often advisable to seek legal advice, especially if your circumstances are complex. This can minimise the chance of mistakes occurring.

As your circumstances change, your wishes may do too. So, commit to reviewing your will regularly and updating it if necessary. 

7. Calculate if Inheritance Tax could affect your estate

The standard rate of Inheritance Tax (IHT) is 40%. So, if the value of your entire estate exceeds certain thresholds, it could reduce what you leave behind for your family. However, there are often steps you can take to reduce an IHT bill if you’re proactive.

The nil-rate band is £325,000 for the 2022/23 tax year – if the value of your estate is below this threshold, it will not be liable for IHT. If you leave your main home to your children or grandchildren you can also use the residence nil-rate band, which is £175,000 for the 2022/23 tax year.

As a result, many people can pass on up to £500,000 before IHT is due. If you’re married or in a civil partnership, you can also pass on unused allowances. This means if you plan with your partner, you may be able to pass on up to £1 million before IHT is due. 

Effective estate planning could help you make the most of other allowances to pass on as much as possible to your family. 

Contact us to talk about your family’s financial security 

While the above seven steps can help improve your child’s financial security, your plan should be tailored to you and there are often other things you can do. Please contact us to arrange a meeting and discuss what steps you could take.

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

Recently, you may have read headlines about how pension funds were close to collapsing. Naturally, you may be worried about your retirement savings and what protection is in place. Read on to find out. 

In September, former chancellor Kwasi Kwarteng delivered a mini-Budget that included aggressive tax cuts. It led to market volatility and the pound falling in value. While the government has since reversed many of the measures, you may have heard that the volatility it caused placed some pensions at risk.

The Bank of England (BoE) said that pension funds with more than £1 trillion invested in them came under severe strain, and several of them were in danger of collapsing following Kwarteng’s statement. Some funds would have been left with negative asset value and wouldn’t have been able to meet cash demands. 

The BoE stepped in with emergency intervention to calm the turmoil. It pledged to buy up to £65 billion of government debt to stabilise the markets. 

The steps taken by the BoE were effective, but the news that pension funds could collapse due to political and economic uncertainty can be a worry. However, there is protection in place.

The Pension Protection Fund protects defined benefit pensions

Much of the concern about pensions collapsing was about defined benefit (DB) pensions, also known as “final salary” pensions.

A DB pension is often considered the gold standard of pensions, as they will provide a reliable income for the rest of your life. The income provided is usually calculated based on your average salary and how long you’ve been a member of the scheme.

Many DB pensions also come with other benefits, such as providing an income for your partner or dependent children if you passed away. 

DB pensions are now less common as they represent a significant commitment from the pension scheme. As life expectancy rises, they’ve become more expensive to administer. However, they are valuable for retirees as they offer financial security and are often generous. 

If a DB pension scheme collapsed, the Pension Protection Fund (PPF) could protect your retirement income. 

According to the PPF, it protects millions of people who belong to a DB pension scheme in the UK and pays pension benefits to more than 260,000 people.

If your DB pension becomes insolvent and cannot provide you with the pension they promised, the PPF could provide compensation instead. 

If your pension scheme qualifies, the amount of pension compensation you’d receive would depend on if you’ve reached the scheme’s pension age or not.

  • If you are under the pension age, you’d be entitled to 90% of the pension amount you had built up before the scheme became insolvent.
  • If you are over the scheme’s pension age or start drawing your pension early due to ill health, you’ll receive the full pension.
  • People receiving a survivor’s pension, such as widowers or children, will normally qualify for 100% of the pension income.

One important thing to note is that your income may not increase annually by as much as you expect through the PPF.

Many DB pensions provide an income that rises in line with inflation to preserve members’ spending power throughout retirement. However, increases in PPF compensation are capped at 2.5%, which could be significantly below expectations in a high inflation environment. 

You can find a full list of pension schemes that are covered by the PPF here: ppf.co.uk/schemes/index 

The Financial Services Compensation Scheme covers defined contribution pensions

Much of the turmoil reported in the news related to DB pensions, rather than defined contribution (DC) pensions. However, there are still protections in place for DC pensions that could give you peace of mind.

With a DC pension, you will make contributions, which benefit from tax relief, and are usually invested through a fund. In most cases, your employer will also need to make contributions on your behalf. When you retire, you will have a pot of money that you can use to create an income. 

If your DC pension scheme collapses, you will often be covered by the Financial Services Compensation Scheme (FSCS).  

  • You can claim up to 100% of your pension, with no upper limit, if your pension provider fails. 
  • If your self-invested personal pension (SIPP) operator fails, you can claim up to £85,000 per person, per firm.

Pensions are complex, and you can check how protected your pension is here: fscs.org.uk/check/pension-protection-checker 

The FSCS will not provide compensation if the investments held in your pension have not met your expectations or fall in value. So, it’s still important to understand your risk profile and choose a fund option that’s suitable for you. 

Contact us to talk about your pension

If you have questions about your pension, including how your savings are protected and what you can do to get the most out of them, please contact us. 

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results. 

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.  

If you’re retiring in 2023, congratulations! It’s an exciting milestone that you’re no doubt looking forward to.

Here are six practical steps to take now to make sure you can retire with confidence and be financially secure. 

1. Set a retirement date

One of the important first steps is deciding exactly when you want to retire. 

This can help you decide when you’ll need to give notice to your employer and handle passing on responsibilities or projects to your replacement. 

It can also help you create an effective timeline for when you need to complete other tasks and make sure everything is ready for your retirement. 

It’s worth reviewing if you currently have valuable workplace benefits, such as life insurance or health insurance, that you’d like to maintain. It can ensure you don’t have any gaps in your retirement plan, and you can make it part of your budget from the outset. 

2. Check your State Pension

While you may have other sources of income in retirement, your State Pension is important as it provides a reliable source of income for the rest of your life. 

Knowing what income your State Pension will provide and when you can claim it means you can effectively plan how to use other assets. For instance, if you’re retiring before the State Pension Age, you may need to take a higher income from your personal pension initially to fill the gap.

The State Pension Age is slowly rising. It is 66 and is expected to reach 67 by 2028. 

You can use the government’s State Pension forecast to check how much you could receive, when you can claim it, and how you may be able to increase your entitlement. 

3. Review your pension and calculate your income needs

To ensure you’re financially secure in retirement, you need to understand how much income you need. This should cover both your essential expenses and the disposable income that will allow you to live the life you want. 

With a figure in mind, you can review your pension and start to understand whether your savings will be enough.  

Remember, your income needs may change throughout retirement and inflation will have an effect. You may also want to consider how other assets can be used to boost your income. 

When assessing if you’ve saved enough, you’ll need to think about how long your pension and other assets will need to last. Retirement can span many decades and calculating your long-term income needs now can help ensure you are financially secure in your later years. 

4. Assess your financial safety net

As many retirees aren’t earning an income, it’s important that you take steps to ensure you can weather a financial shock.

If investments experienced volatility, for example, do you have an emergency fund that you could use in the short term? Or what would happen if you needed to pay an unexpected bill?

An emergency fund can continue to add value to your financial plan in retirement. Depending on your circumstances there may be other things you can do to create a safety net too. 

If you’re planning with a partner, it’s important to consider how financially secure either of you would be if the other passed away. It can be difficult to consider this but means you can take steps to create long-term security if the worst happens. 

5. Book a meeting with a financial planner

As you approach retirement, you’re likely to have to make large financial decisions that could affect your income for the rest of your life. Seeking the support of a financial planner can help you understand your options and have confidence about retiring.

From your options when accessing a pension to the tax implications you may need to consider, we can help you create a retirement plan that’s right for you. It means you can focus on enjoying retirement. 

If you’d like to talk to a financial planner about your retirement, you can contact us.

6. Set out what you’re looking forward to

While getting your finances in order is a vital part of retirement planning, so is preparing for the next chapter of your life.

Don’t forget to think about the things you’re looking forward to. Whether you’re hoping to spend more time with grandchildren, take up a hobby, or something entirely different, start thinking about how you want to fill your time. It can help ensure that retirement meets your expectations and is fulfilling. 

Please contact us to discuss how you can balance goals with your finances. 

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results. 

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.  

At the start of a new year, it’s common to reflect on what you want to achieve over the next 12 months and to set out some goals. It’s the perfect time to think about how you could improve your financial wellbeing too.

Around a third of Brits setting a new year resolution want to save more money. As well as boosting your savings account, there are other positive steps you can take to improve your financial wellbeing, such as:

  • Reviewing your current mortgage deal
  • Creating a plan to invest regularly
  • Increasing your pension contributions
  • Getting your estate plan in order.

Download your copy of “10 new year resolutions that could boost your financial wellbeing” to start thinking about how the financial decisions you make in 2023 could help you meet long-term goals.

If you have any questions about how to improve your financial wellbeing, please contact us.

Humans are hard-wired to make poor financial decisions. It’s just in our DNA.

Financial wellbeing is a broad topic, covering all aspects of the relationship between money and our long-term happiness. It covers a wide variety of subjects, including how to manage money better, and how to use money to generate wellbeing.

In some ways, financial wellbeing is about getting out of the bad habits we have acquired by linking money with success.

If you want to improve how you make financial decisions, this guide covers six steps to take:

  1. Understanding why you are bad with money
  2. Understand the sources of wellbeing
  3. Identify your objectives
  4. Don’t be a financial wellbeing junkie
  5. Connect with your future self
  6. How to give.

Download your copy of “Financial wellbeing: 6 ways to help you make better financial decisions” to learn more.

If you have any questions about your financial plan and how to improve your wellbeing, please contact us.

High levels of inflation and economic uncertainty continue to plague the investment markets. Investment portfolios are likely experiencing volatility – read on to find out what has been influencing markets.

Despite the doom and gloom statistics, financial services firm JP Morgan suggests that a global recession could be avoided as inflationary pressures ease.

As an investor, you may worry about what the current circumstances mean for your investments and financial goals. Remember, you should invest with a long-term time frame in mind and focus on performance over years, rather than weeks or months.

If you have any questions about your investment portfolio, please contact us.

UK

There were several pieces of big news in the UK during September.

Liz Truss was appointed prime minister on 6 September after winning the Conservative Party leadership race. Just two days later, Queen Elizabeth II passed away and many businesses chose to close or limit operations as a mark of respect during a period of mourning.

During the leadership race, Truss said she’d hold an emergency budget to tackle soaring energy bills and address other economic challenges.

Newly appointed chancellor Kwasi Kwarteng delivered the “mini-Budget” on 23 September. Among the announcements were:

  • Confirmation that there will be a cap on household energy bills at £2,500 a year for a household with average use for two years. In addition, the new Energy Bill Relief Scheme will provide support to businesses, voluntary organisations, and public sector organisations.
  • The additional-rate Income Tax band will be abolished from April 2023.
  • The cut to the basic-rate of Income Tax from 20% to 19% has been brought forward to April 2023.
  • The plan to raise Corporation Tax in April 2023 from 19% to 25% has been scrapped.
  • The National Insurance hike that was introduced in April has been reversed, as has the Health and Social Care Levy.
  • The Dividend Tax rise will be reversed from April 2023.
  • A Stamp Duty cut means that the tax will not apply to the first £250,000 of a property purchase. The threshold for first-time buyers also increased to £625,000.

The raft of tax breaks announced by the chancellor led to market volatility and the value of the pound falling against the euro and US dollar.

Inflation also remained high – it was 9.9% in the 12 months to August 2022. In response to inflation, the Bank of England (BoE) increased its base interest rate again to a 14-year high of 2.25%.

The BoE also said that the British economy is now in a recession after contracting for two consecutive quarters.

Official wage data highlights the pressure many families are facing. While average pay (including bonuses) rose by 5.5% in August, it’s a fall in real terms once you factor in inflation.

The economic situation is also affecting aspiring home buyers. Not only do rising interest rates mean repayments will be higher, but some mortgage providers have withdrawn products from the market due to concerns about potential defaults.

Many businesses are struggling with rising costs too and data suggests there could be further challenges ahead.:

  • The S&P Global purchasing managers index (PMI) suggests the manufacturing sector suffered its steepest downturn since the first Covid-19 lockdown as domestic and overseas demand fell.
  • The PMI reading for the service sector fell to 49.6 in August, signalling that the sector is contracting.
  • According to data from the Office for National Statistics, the value of sales by small businesses fell by 10% in July, when compared to the previous month. It’s the largest fall since April 2020, when lockdown restrictions were in place.

With these statistics in mind, it’s not surprising that research from the Confederation of British Industry shows a negative outlook. British manufacturers expect the biggest drop in production since the start of last year in the next three months.

Europe

European economies face many of the same challenges as the UK.

In the eurozone, inflation reached 9.1% in August. It led to the European Central Bank (ECB) lifting interest rates by a record amount to try and curb inflation – the base interest rate increased by 0.75 percentage points.

Forecasts for Germany’s economy highlight some of the obstacles to overcome. The Ifo Institute now expects the German economy to contract by 0.3% in 2023. Fears of energy shortages are also fuelling concerns, with a ZEW Institute economic sentiment tracker finding that investor morale is falling.

US

Again, inflation continues to be an issue in the US. Inflation fell slightly when compared to a month earlier in August to 8.3% but it was still higher than expected. Food inflation was also at its highest level since 1979 after a 13.5% year-on-year increase.

However, payroll data indicates that businesses are still confident as employment increased by 315,000 in August.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

There are lots of great habits from around the world you can adopt to boost your wellbeing. Even better, some of the most beneficial habits in the world are those that cost little and have been around the longest.

Read on to discover 10 tried-and-tested habits from cultures all over the globe that may help you improve your wellbeing.

1. Turkish hammam baths

A practice as old as civilisation itself, Turkish hammam baths have been found in ancient Greek, Egyptian and Roman histories. Hammam baths are tall, marble chambers where people spend time relaxing.

The baths are characterised by their tall marble interiors and moist, steamy environment. They are unique in that hammam baths have almost 100% humidity compared to a dry 15% found in saunas.

This combination of moisture has many wellbeing benefits and has likely stayed around so long because of them. It is widely considered a spiritual activity by its Islamic founders, who claim that cleanliness brings a person closer to God.

Beyond the spiritual, hammam baths have the potential to benefit physical health as well. They are thought to open pores, remove bodily toxins through sweat, improve blood circulation, clear the respiratory tract, aid metabolism, and mentally rejuvenate the individual.

2. Japanese ikebana

“Ikebana” is a Japanese tradition of arranging flowers, blossoms, branches, leaves, and stems into decorative formations to be featured somewhere in the house.

The hobby offers a refreshing contrast to the way Western philosophy approaches indoor plants, as ikebana favours considerate arrangement of the flowers as opposed to dropping them in a vase.

Three rules govern ikebana’s practice – colour, line, and mass. Successful examples of ikebana will find a balance of these three elements in their arrangement.

While ikebana is also intended to improve a room’s atmosphere, cognitive benefits to your wellbeing include reduced stress, and mental rejuvenation, along with the recognition of natural imperfection, simplicity, and balance.

3. Mediterranean diet

The Mediterranean is famous for more than just its sun and warm waters.

Countries along the Mediterranean are known for having uniquely healthy eating habits, including moderate amounts of oil, legumes, fruits, whole grains, wine, and fish.

The diet is based on the types of food eaten by those living along the Mediterranean basin, such as Italy, Spain and Greece.

Origins of this specific style of eating are lost to time, despite having vague roots in Ancient Greek and Roman cultures. By 1975, the Mediterranean diet was theorised and publicised by chemist Margaret Keys along with her husband, biologist Ancel Keys.

Eating a Mediterranean diet is widely thought to reduce risks of heart disease and stroke, Alzheimer’s, Parkinson’s and high cholesterol.

4. Fika in Sweden

Coffee breaks in Sweden are unlike anywhere else.

In Sweden, workplaces encourage their employees to “fika”. It involves taking a leisurely coffee break with friends or family at a café to unwind from work.

The word originated as a noun for a coffee break, but its popularity has seen it adopted as a verb for the act of taking coffee breaks. Now, to take a coffee break is to “fika”.

A fika is enjoyed outside as often as it is inside and can commonly be found accompanied by “fikabrod” – a sweet pastry to complement your coffee.

While this sounds like an employer’s nightmare, some workplaces in Sweden actually mandate fika since it is believed to boost productivity, reduce fatigue and improve memory.

5. Turmeric in India

India is known worldwide for its love of spices and exciting flavours in its cuisine. What many are unaware of, however, is the number of health benefits to be had from including spice in your food.

Many different aromatics and spices are native to India and grown in abundance, which would be impossible elsewhere. Popular examples of these are black pepper, cardamom and cumin. So, it’s no wonder the country has a love for flavour like no other.

Turmeric is the most notable of all spices in India and arguably has the most benefits. Almost all the global supply of turmeric grows in India – 80% of that is consumed within the country.

Giving the fragrant, yellow seasoning its healthy property is a bio-active compound named “curcumin”. It is known to moderate adipose tissue, which prevents the formation of blood vessels in fat deposits around the body.

Perhaps it’s worth sprinkling some turmeric into your next meal?

6. Intermittent fasting in Indonesia

Intermittent fasting is defined by restrictive eating habits, as participants often refrain from eating during the daytime. The breaking of fast is often done in the early morning and late evening to avoid the adverse effects of long-term fasting.

The approach to fasting among Indonesians is very casual and there is a plethora of types of fast to choose from. Many of these have philosophies attached to them that aid an individual’s outlook while performing the fast.

“Mutih”, for example, is a meal with strictly no flavour. Its most common form appears as a portion of white rice and water. Not even salt is permitted with the rice, showing the commitment people have towards fasting.

Restricting your eating habits, the way intermittent fasting does, can help to control blood sugar levels, improve the strength of the heart, and prevent cancer and aging. It can also aid the prevention of neurodegenerative diseases.

7. Cycling in the Netherlands

In a country with more bicycles than people, it should come as no surprise to see the habits of the Dutch on this list. Cycling has become somewhat of a national identity for the Netherlands.

With roads and paving frequently designed to accommodate the vast numbers of cyclists in the Netherlands, the habit has become a lifestyle in which small but frequent bike journeys offer significant health benefits.

Cycling can support cardiovascular health, weight loss, and joint mobility and it improves posture and strengthens bones. On top of this, it can further benefit wellbeing by providing cleaner inner-city air by taking cars off the road.

8. Friluftsliv in Norway

Translating to “open-air living”, friluftsliv is a Norwegian concept that encourages being out in a natural, open surrounding as much as possible.

The term was originated by Norwegian writer, Henrik Ibsen in the 1850s to represent the concept of spending time outdoors for physical and spiritual wellbeing.

Enthusiasm for this lifestyle is shared by many people among other Nordic countries. It is thought that their large land masses, relative to their small populations, instils a unique adoration for the natural surroundings.

Almost anything can fit within the parameters of friluftsliv and Scandinavians will cycle, picnic, walk, camp, or sit just to enjoy the outdoors.

Around half the population of Norway have access to a rural summerhouse of some kind, compounding their love of spending time in natural surroundings.

Becoming closer with nature isn’t the only benefit to friluftsliv as it has been found to improve eye health and happiness, strengthen the immune system, and decrease levels of stress.

9. Drinking tea in China

Drinking tea is viewed as a therapeutic practice in China. It’s highly popular among its population as over two tons is drunk every year – that’s over one-third of the world’s total.

Legend says that, almost 5,000 years ago, a Chinese emperor discovered tea when a tree’s leaf blew into a pot of boiling water, enticing him with its smell.

The activity is an important part of Chinese tradition and culture, also having roots in traditional Chinese medicine.

It is commonly drunk after large meals to aid digestion but is also believed to reduce risks of neurological diseases, strokes and numerous types of cancer, as well as lowering cholesterol.

10. Regular massages in Thailand

Thailand’s long history with massages begins around the time Buddha himself was alive – over 2,500 years ago.

The massage itself focuses on healing, rather than relaxation, and is defined by compressing, pulling and stretching the body with no oils or rubs.

Buddhist monks are widely credited as having developed the practice. A close friend to Buddha, Jivaka Komarabhacca is said to be the father of the Thai massage with his tremendous knowledge of healing and medicine.

Thai massages offer many wellbeing benefits. These include releasing muscle tension, improving blood circulation, and boosting the immune system, as well as lowering heart rate and blood pressure.