Finding freedom and fortune outside the UK

A buddy of mine has had enough – he’s getting out of here.

It was the first time we’d seen each other since the lockdown began. I could tell he was somewhat different when I met him, and not just because of his appearance – he’d lost weight and shaved his beard off (while I’ve gained weight and grown one).

We’ve been friends for many years now, having trained to become financial advisers together in Swindon in what feels like a different era these days. He still works in the financial industry, working for a wealth management firm in the City – though he doesn’t plan to for much longer, if he has his way.

Over a few tins of beer on Hampstead Heath, he informed me that he’s had enough of Her Majesty’s government and plans to leave England’s green and pleasant land.

He’s tired of paying so much in taxes and inflation to support a state that is ever more greedily stealing his freedom. To his eyes, the WuFlu lockdown is the last straw – it’s a foreshadowing of the direction the country is going, showing both the extent to which the government can impinge on our everyday lives, and the meek submissiveness with which the citizens accept it. He wants no part of such a future – doesn’t want to be stuck in it, or to fund it.

I respect his decision. I see no end to the bear market in freedom that is ongoing in this country, or an end to appetite of the state for more of its citizens’ money. While I love our great nation, I am no fan of big government, and it’s only getting bigger.

The question is, where does a Brit seek freedom and fortune abroad?

He’s thinking to give Texas a look first – once the WuFlu chaos will let him at least. While Texas may have locked down, the state is notorious for its protection of individual liberties and promotion of individual responsibility. It doesn’t charge income tax either, with the state getting much of its revenue from property taxes instead. I think I’ll go with him for the scouting trip – I’ve wanted to see the Alamo since I saw John Wayne’s production of its famous battle when I was a kid.

Are you considering moving abroad in search of life, liberty, and the pursuit of happiness – or have you done so already? If so, I’d love to know why and your experience of seeking freedom and fortune living abroad: boaz@southbankresearch.com.

Switching gears…

Over the last few weeks, we’ve been writing on the topic of inflation, and how it might return with as much fury as it did in the 1970s. With UK debt to GDP reaching levels not seen since the 60s and government intervention in the economy rising sharply, will the consequences be the same as they were 50 years ago?

I think the key test of this thesis will be when lockdown is properly over and everybody can earn and spend as they did before – the problem is that may take quite some time. But I was struck by this Financial Times article, which highlighted how inflation may already be higher than reported (which is what feels it like from my perspective):

The coronavirus crisis has led the Office for National Statistics to understate the speed prices are rising, according to a growing body of research during the pandemic.

Research from the National Institute of Economic and Social Research has claimed that the Office for National Statistics’s measures of annual price increases were 0.4 percentage points too low in May because they put too much weight on goods and services that were unavailable because of Covid-19, dragging the inflation rate down.

The ONS reported that the Bank of England’s target measure of CPI inflation fell to 0.5 per cent in May and a wider measure including homeowners’ housing costs was 0.7 per cent, but these were significant under estimates according to professor Huw Dixon of Cardiff University. “A lot of people think there’s quite a bit more inflation going on at the moment and I think they’re correct,” he said, explaining the ONS’s low measure of price rises as originating from the statistics authority “having to stick with international measurement protocols”.

These, he said, did not reflect the reality of price changes through the pandemic. The particular problem, he said, was that the ONS could not measure the prices of 16 per cent of the normal basket because some items such as hair cuts and restaurant meals did not exist at the moment while others such as petrol were being bought in much lower quantities than normal. 

At the pub over the weekend, I found that many of the beers that were once £5 a pint (I know, I know – London prices) were now well above £6. I wonder how much of that increase is the pub increasing prices due to lack of footfall (social distancing rules structurally reduce every pub’s capacity), a scarcity of beer, or brewers increasing prices to stay afloat.

A reader writes in with amusement:

Apologies but I did laugh when you mentioned your local lockdown beer outlet selling pints of IPA at £6.90 a throw. It certainly highlighted one of the negatives of life in the nation’s capital. When I was last in the ‘big smoke’, many of the pubs we visited were selling beer at £5 a pint but you could get one for £3.50 at Wetherspoon.

With the pubs shut here in deepest darkest East Yorkshire, I have been buying Polypins of beer from a couple of the local breweries. With their normal customers – the pubs – no longer taking any of their wares, they could have just unplugged the vats and poured the beer down the drain at a loss. Instead they started selling it direct to the customers, with free delivery for people with local post codes. A 20 litre Polypin (about 35 pints) for £55 worked out at just over £1.50 a pint – cheaper even than Wetherspoon was selling it (£2.15 at my nearest).

I had a look online for some of the breweries that do my non-local favourite beers and some of them had started selling bottled beers and there were a couple of others doing free delivery to locals (sadly, I do not live local enough for Sheffield and Barnsley). As a fan of real ale, I am delighted that these brewers were using their initiative to keep their businesses afloat.

Those of us old enough to remember the £1 note can remember the days (when they were a student in Leeds) of buying beer for 60p a pint and going home tipsy for a fiver.

Unless you’re an extreme lightweight or injecting ethanol straight into the vein, getting tipsy for a fiver seems impossible now. If I had memories of such a time, I would certainly feel nostalgic, but here in the present I just want to get my hands on some of these polypins – I wish pubs near me were offering them!

But even if inflation doesn’t come back with the vengeance of the 70s, the cost of a pint across the UK is doomed to hit and then breach the £6.90 level sooner or later. That’s the problem with inflation – it may be gradual, but it never stops…

All the best,

Boaz Shoshan
Editor, Capital & Conflict

PS If you enjoy our work here at Southbank Investment Research, our publisher has a proposition for you – one that he doesn’t often make. And the next time he makes it, it’ll be for a higher price – so you might want to give it a look sooner rather than later…

For charts and other financial/geopolitical content, follow me on Twitter: @FederalExcess.

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