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KEEPING YOU IN TOUCH - YOUR FREE MONTHLY NEWSPAPER DELIVERED DOOR-TO-DOOR FOR 32 YEARS


Anyone currently alive, is used to the idea that when you deposit money with a bank, it will pay you interest. Whereas if you borrow money, you will repay a higher amount to the lender. History shows us this has not always been the case.


YOU WILL PAY US TO LEND US MONEY! CONSIDERED WORDS BY


OAKTREE ACCOUNTANCY


In 87 of the last 324 years, the inflation rate has been higher than the normal borrowing rate and right now, you need to pay interest to the Swiss government to invest in its bonds. Like any other commodity, the price of money is determined by the supply and demand for it. Right now, believe it or not, worldwide there is a lot of money chasing very limited demand.


I think there is a good chance 2020 will see some borrowers being paid to borrow in the country and some savers having to pay to


save. So, a saver depositing £100,000 on 1st January 2020 could be repaid £99,500 on 31st December 2020, for example.


The world is teetering on the brink of recession, thanks to the silly trade wars of Trump the Chump. Meanwhile, our country has stepped forward to carry out a risky project, which will damage our trade prospects in the short-term. In that scenario, negative interest rates could make a lot of sense and give us a way out of the mess.


For a start, they would enable the Government to borrow at stupidly low levels.


So, even if they make a mess of spending the money like they seem to have with HS2 – at least a load of interest will not be adding insult to injury. Low rates would also give businesses facing the biggest Brexit risks some leeway to get through 2020 without entering liquidation. Not Thomas Cook, where Brexit was one of a number of headwinds the company could no longer survive.


A low interest environment is hard to deal with psychologically, if you can remember times when banks paid you 15% per year to deposit with them. Thank goodness we don’t have 15% interest rates right now, or our economic prospects for 2020 would be truly terrible. As it is, they are just a ‘bit terrible’ in my view.


Chris MacLeod BOOST YOUR BOTTOM LINE WITH A FIXED PRICE ACCOUNTANT


Proactive, quality accountancy support for your business First Two Months FREE with Oaktree!


Chris MacLeod ICPA INFO@COCKERMOUTHPOST.CO.UK


Call Chris for a free chat on 07889 181 080or 01900 268 086 www.oakacc.co.uk ISSUE 436 | 24 OCTOBER 2019 | 30


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