Fakenews

Fake news is constantly in the headlines these days.  Even the Oscars got in on the act by announcing a fake winner for best picture.  However, if news actually is fake does that mean the headlines about it are made up?  It is all very confusing….

I have said numerous times before that you need to take a step back from what you see and hear from the media as the need to create fear amongst people to get sales or clicks is their raison d’etre.  As well as this there is often a spin put on whatever is reported to either suit the politics of the readership, in the case of papers, or the views of the journalist.

Just last week I heard a classic example on the radio news.  It was reported the number of people in the UK that have booked a holiday to the US was 20% lower than a year ago “as a result of Donald Trump becoming President.”  Really?  People have told their children that they can’t visit Mickey Mouse because Trump is now President?

Now unless we ask every person that would have gone to the US but have decided against doing so why they changed their mind we will not know for sure the real reason.  (Is it anything to do with the strength of the Dollar against the Pound, compared to a year ago, which means that it is now 25% more expensive?)  So how can a “news” organisation make such a claim?

Why can facts simply not be reported and let us make our own minds up as to what the cause and effect may be?  In an effort to make you better informed I think it appropriate to give you an advanced warning of some of the news you will be hearing and reading in the coming months.

It is certain we will see an increase to annual inflation as a result of the pound’s weakness from last summer.  Now do you think it will be reported soberly or will we see headlines such as “cost of living soars as result of Brexit?”  I know what my money is on.

The truth is the Bank of England have been tasked with trying to ensure that inflation is at a rate of 2% per annum (a rate deemed to be good for the economy) since Gordon Brown gave the bank independence to set interest rates in 1998.  It is over 3 years since this target has been met and it would need to average 4% for the next two years to make up the lack of inflation we have seen since 2014.  Therefore an increase in prices could be seen as a positive sign for the economy but don’t hold your breath in hearing that.

We are also going to be bombarded with Brexit news.  In Scotland we keep hearing from our First Minister that it is vital that we retain membership of the European single market.  What I do not read or hear about is what cost does being a member of the EU have when it comes to dealing with the remaining 6.5bn people in the world.

Speaking to a client who has an engineering business that exports to over 60 countries in the world was eye opening.  For example, I was unaware that being an EU member meant he suffers a tariff of 40% on his exports to Brazil, which is the world’s seventh largest economy and has the same population as Germany, France and Italy combined.

In the next thirty years Asia will be responsible for over 50% of the world’s trade and being able to set our own agreements with countries in this region and the Americas could give UK companies a big advantage against their EU competition.

Who knows?  One thing for sure is there is always a flip side to whatever is reported and, to avoid making disbelievers of everyone, journalists would be advised to stick to the facts and keep the spin to a minimum.

Steve
Author
Steve Forbes
Managing Director
Alan Steel Asset Management Ltd is authorised and regulated by the Financial Conduct Authority

The Financial Conduct Authority does not regulate tax advice

This letter is the personal view of Steve Forbes. Please check the appropriateness to your individual position with your adviser before taking or refraining from any action.

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