Welcome to our #145 weekly newsletter.
“For women taking control of their financial future”
-Jana Hlistova
From The Purse
Happy New Year! And it’s good to be back.
In this week’s newsletter, we focus on the economic projections for the UK in 2023 and why the UK has been forecast to lag significantly behind other developed nations. But economists expect to see growth in 2024.
And don’t forget to listen to the interview with Tatum Getty on The Purse Podcast. Tatum is the Co-founder of THENA Capital, a new UK MedTech fund focused on investing in early stage digital and device companies in the health sector.
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We have planned a few online events for you this year.
Our first online event in the series is about closing the gender wealth gap and managing your money during times of uncertainty.
Join me, Vicky Pryce and Victoria Ross in this important panel discussion. We hope to see you there! Please share this with anyone who might find this useful.
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You can review the news in brief so you stay on top of global financial, economic and investing trends.
I hope you enjoy this week’s newsletter.
See you on Wednesday for a (new) bi-weekly update.
Until then,
Jana
The UK recession will be almost as deep as Russia, but are economic prospects in 2023 better than we think?
According to Goldman Sachs, the UK economy is forecast to contract by 1.2% (real GDP) in 2023, which is only 0.1% less than Russia, as reported by CNBC.
Although the EU and UK are likely to already be in a recession, it is possible that the UK economic prospects for 2023 are better than we think. Why?
Natural gas prices are half of what has been included in global forecasts.
China has ended its zero-Covid policy which is likely to improve the global economic prospects later this year.
Regardless, the UK has been forecast to lag significantly..
… behind other developed nations facing the same macroeconomic issues of surging inflation, rising interest rates, the war in Ukraine and global supply bottlenecks.
This is because the UK faces unique challenges which relate to:
A long-term sickness crisis
The ageing population leaving the workforce
Heavily depleted trade as a result of Brexit
More drawn out increase in household energy prices (and possibly more ‘sticky’ inflation)
And a lack of investment to fuel growth in the economy.
All of which continues to drive the cost of living crisis for consumers who have no choice but to cut back on spending.
The U.K. independent Office for Budget Responsibility projects that the country faces its sharpest fall in living standards on record. Real household disposable income, a measure of living standards, will fall by 4.3% in 2022-23.
KPMG expects the Bank of England (BoE) to raise interest rates to 4% in the first half of 2023, and forecasts the labour market to start deteriorating. Unemployment is expected to hit 5.6% mid-2024.
Although market consensus is…
.. that the UK will contract by 0.5% in 2023 and will expand by 1.1% in 2024, Goldman is more pessimistic and projects UK growth to only be 0.9% in 2024 compared to Russia’s 1.8% expansion in 2024.
On the other hand, Goldman projects the US economy to expand by 1% in 2023 and 1.6% in 2024.
Globally, nearly all current forecasts suggest growth in the world economy, with cautious optimism expected as the year progresses, and into 2024.
What next? (Re) listen to The Purse Podcast:
#68: Rising inflation and the cost of living crisis in the UK with Shaun Richards
#75: How volatile is the UK bond market and the problem with UK growth with Vicky Pryce
News in Brief
Financial news
Wall Street rallies after US jobs report: December’s better-than-expected job creation, with 223,000 new hires last month, suggests the US labor market remains solid. And the drop in wage growth may ease concerns over inflation.
Fed officials last month affirmed their resolve to bring down inflation, cautioning that ‘unwarranted’ loosening of financial conditions would hurt their efforts to achieve price stability (as per December meeting notes). Going into meeting, markets were pricing in rate cuts in H2 2023.
Energy prices keep falling. European gas price drops <€70/MWh while German 1y ahead power price drops <€200/MWh as energy crisis abates.
Eurozone inflation’s sharp drop to single-digit masks underlying pressures. Prices rose by 9.2% in December; economists expected 9.5% but core inflation hits record-high 5.2% as the European Central Bank (ECB) hikes to continue.
Big Tech has also lost all Corona gains. The combined market capitalisation of Apple, Microsoft, Alphabet, Meta and Amazon (AMAMA) has fallen from $10.2tn to $5.9tn now.
Average UK house price falls for fourth month in a row, says Halifax. Figure of £281,272 comes as property values drop by 1.5% in December, after 2.4% decline in November. The annual rate of house price growth more than halved, to 2% in December, from 4.6% in November.
Crypto: bitcoin, ethereum, DeFi & NFTs
Macroeconomic data points toward intensifying pain for crypto investors in 2023. Chances of a crypto bull market in 2023 decrease as the Fed maintains a hawkish stance and threats of a recession in the U.S. economy continue to appear.
Crypto prices rose, with Solana experiencing the most significant gains. Bitcoin is trading at $16,940+. Ether has experienced a more significant jump, tacking on 3%+ trading at $1,260+. Solana led the way, jumping 14% to $13.49 from $11.82.
Last month NFT trading volumes on Solana showed signs of strength. The week of Dec. 25 saw the most activity for Solana NFTs since September. Amid the rout in NFTs, Solana never lost its second spot to Ethereum throughout 2022, according to The Block's Data.
Bluechip NFT project Moonbirds signs with Hollywood talent agents UTA. The Ethereum-based Moonbirds project launched in April 2022 and consists of 10,000 8-bit owl-themed avatar NFTs. To date, it has generated roughly $619.5 million worth of secondary sales according to data from CryptoSlam. The goal of the UTA deal is to get the Moonbirds brand known on a ‘global’ mainstream scale, as opposed to just being recognised as a big hitter in the Web3 space.
McKinsey report: Metaverse to potentially create $5tn of value by 2030. For the Metaverse to reach its full potential, the report highlighted the need for four technology enablers — devices (AR/VR, sensors, haptics, and peripherals), interoperability and open standards, facilitating platforms and development tools.
The Purse Podcast
We cover the following in our conversation:
How Tatum set up THENA Capital with her two co-founders
Why they're applying a gender smart strategy to how they invest
Raising investment: finding the right investors
Working with mentors and advisors
Lessons learned
How women can start to invest in the startup ecosystem via a fund.
Please enjoy! Listen on Apple Podcasts and Spotify+
Coffee Break? Read This
We’d love to hear from you. Get in touch with Jana via the The Purse website or tweet @jointhepurse and janicka.
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The Purse provides content for informational purposes only, we do not recommend products or services or provide investment advice. Please do your own research or speak to a financial adviser.
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