How not to pitch Britain

I’m having a tough time trying to persuade the Japanese future in-laws to let their first-born move to London.

Relations between Japan and our capital city have been strained since former mayor Boris Johnson flattened a ten-year-old Japanese child trying to tackle him in a game of rugby.

Political incidents aside, having to pitch Britain to foreigners has got me worried myself…

Is it safe there?

Well, the stabbings continued in London this week, leading to calls for a ban on pointy knives from the upper levels of the UK judiciary. The Independent newspaper is worried about racist street riots thanks to the arrest of Tommy Robinson.

But it’s not all bad news when it comes to your personal safety as a foreigner in London.

The attempt by an evil global superpower to assassinate a former Russian spy and his daughter with a terrifyingly powerful nerve agent ended up killing two guinea pigs, who died of thirst, and a malnourished cat, which had to be put down, but no humans.

This is especially suspicious to Japanese people who have a history of war with the Russians. They pretended to be immensely impressed with the NHS’s ability to save people from such a potent nerve agent.

What about the financial consequences of moving to London?

Examining rental costs led to the assumption I missed a decimal point somewhere, or confused the weekly costs for monthly.

Part-time worker wages in the UK capital are about the same as small-town Japan, only the cost of living is some multiple higher. I can add that the quality of goods and services is some multiple lower in London.

Financial infrastructure in the UK is far more convenient once you’re in the system. Until something goes wrong. I had to explain that a major British bank can’t get its IT system in order, resulting in customers being overcharged on their mortgages and unable to access online banking.

What does our long-term financial future look like in London?

The statistics on the UK pension system did not go down well.

The Adam Smith Institute calculated that “every person in Britain would have to pay more than £53,000 to cover the cost of public sector pensions and other unfunded government schemes.”

The Financial Times reports on what it takes to retire outside the unfunded system according to the International Longevity Centre-UK:

According to the report, young workers in the UK will need to put away 18 per cent of their earnings each year in order to have an “adequate retirement income” — a higher proportion of their earnings than their counterparts in any other OECD country.

Adequate retirement income is defined as around two-thirds of a person’s average pre-retirement salary.

The ILCUK warned that young workers would need to save an even higher amount — 20 per cent — to achieve the same level of retirement income enjoyed by today’s pensioners.”

As the CEO of a financial education company put it, “The average person would say, ‘Where the hell will I find that?’” In fact, very few people are hitting the required targets.

In its report, the ILCUK noted that only 12.4 per cent of people in the UK are currently saving more than 15 per cent of their earnings for retirement, leaving the majority of people in poor standing to achieve an adequate retirement income.

Forbes points out that the OECD also came to disastrous conclusions a few years ago:

A 2015 OECD study found workers in the developed world could expect governmental programs to replace on average 63% of their working-age incomes. Not so bad. But in the U.K. that figure is only 38%, the lowest in all OECD countries.

The UK pension system bets its retirement future on volatile stockmarkets to a far greater extent than other nations. Not only are the results poor, but the risks are higher too. Any financial market crash would wipe out far more of Britain’s pension assets than almost any other country’s.

Japanese people know just how dangerous this is. Their bubble burst in 1990 and the stockmarket is still down dramatically. Anyone betting their retirement on Western style financial advice would be toast. Luckily, people don’t believe in Western-style financial advice anymore. And so looking at the assumptions of the UK pension system is a shocking surprise. How can anyone be so reckless?

In Japan, the pensions are largely tied to employers, with whom employees remain for life. In the UK, so many of these corporate style pensions are going broke that the government’s pension bailout fund, the Pension Protection Fund, has run out of assets to bail them out with.

So it looks like we won’t be retiring in the UK.

How is the economy doing?

Badly. Recent news was particularly disappointing. The Office for National Statistics reported on the biggest trade deficit since September 2016 and the biggest drop in factory output since 2012. Growth was probably around 0.2% over the first three months of the year.

The only good news is, all this bad news sunk the pound, so moving to the UK becomes cheaper.

The UK’s lack of growth has the EU beaming. But the comparisons to growth on the continent are unfair. Within Europe, countries are growing more and less than the average. There is a natural variation. And so Britain’s underperformance of the EU average could mean very little in the short term.

As for assigning the economic woes to Brexit, that’s a cheap shot too. British exports did well in 2017.

Perhaps part of the story does lie with Brexit though. Just as the pound protected us from the Brexit fallout, it’s now applying pressure to trade as it recovers.

What’s the food like in Britain?

The beer is flat and warm, and that’s the good part.

And why do you want to move to the UK?

Because anticipating these problems gives you an edge. If you are prepared for financial crashes, position yourself to profit from them, and opt out of the financial system with a chunk of your wealth, you can do very well for yourself.

Imagine if someone had told you about the coming crash in 1989, I told them.

Helping readers to do just that is what we’re up to here.

Is now the time to opt out of the financial system?

Having done a miserable job of convincing the future in-laws to let their daughter move to London, we did find some common ground. And it revealed a great deal for British investors.

Having suffered the implosion of a vast financial and economic bubble, where did Japanese investors turn to? Gold.

Investing in gold is probably the longest running piece of financial advice at our international publishing company. And now, we’ve launched a dedicated podcast explaining to readers exactly why they need to invest.

In the opening interviews, Exponential Investor’s Eoin Treacy and renowned gold bug John Butler explain why right now is a great time to buy.

You can listen here, or if you use iTunes to listen to podcasts, click here.

Until next time,

Nick Hubble
Capital & Conflict

Category: Brexit

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