What a week (in finance)

Blimey. This week has been far from relaxing if you are in any way interested in finance – or indeed interested in having any money!

The world shaking news about the collapse of Silicon Valley Bank (SVB) was quickly followed by the potentially much more impactful possible collapse and subsequent bail out of Credit Suisse. Those of us who remember 2008 perhaps quaked a little in our boots, since fallout from failure in the banking sector has wide ranging consequences on ordinary people. Indeed, the failure of SVB is the biggest bank failure of a US Bank since that financial crisis.

Credit Suisse is one of the most important global wealth managers, and is in the top 30 financial institutions who are considered ‘systemically important’ and whose collapse would impact across the financial ecosystem world-wide. Unfortunately with that in mind, Credit Suisse shares have lost more than 75% of their value over the past twelve months and their bail out by the Swiss Central Bank might not even be enough to shore them up in the medium to long term.

So, what does it mean? Clearly as someone who doesn’t work in finance I have only the vaguest idea. In general though, commentators seem to agree that whilst the impact will be felt, the regulations put in place after 2008 mean that they will be felt as ripples rather than a tsunami. However, if SVB was impacted for example by rising interest rates and inflation, then there might be a lot more to come.

The knock on effect has of course been a downturn in the stock market, with share prices reducing and the banking sector in particular – unsurprisingly – hard hit. As we get to the end of the financial year in the UK and I am preparing to max out my stocks and shares ISA I am trying to view this as buying shares on sale, rather than freaking out and hiding my money under the mattress.

The final thing was the UK budget, as announced by Jeremy Hunt. Aside from the cost of living crisis in the UK (and I could say more but I’m trying not to be overly political here…) he is focused on ‘prosperity with purpose’ without seeming to make any meaningful movements to support people’s ability to live whilst the supposed magic happens. Hunt committed to keep the energy cap as well as increasing support to get people into work. What jobs there might be is a different question.

The main news seems to have been the reform around childcare, also based on ensuring people can work more hours, meaning parents of children aged nine months to three will be offered 30 hours a week of free childcare in term time – as long as both parents are working at least 16 hours a week. Let’s see if the issue of childcare places and the under payment of many places under the free hours scheme will get resolved.

How will the budget – or the issues with the Bank – impact you? I’d love to hear from you!

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