AT THE end of 2007, during the ritual journalistic folly of trying to predict the events of the following year, we warned readers to expect a tough 12 months for their finances. As we now reflect upon 2010, the time has come to admit that we were wrong. The past 12 months were not tough at all, they were nightmarish. Indeed, 2008 was as good for finance as 1939 was for world peace. Over the past year inflation soared, stock markets slumped, banks collapsed and cheap mortgages all-but disappeared. But you know the bad news already, so I have decided to try to lift spirits as we prepare for the new year. Tough though it has been, I have found seven reasons to be optimistic about 2010.

 

1. Things are not as bad as you think It is easy, amid the torrent of disturbing economic news, to lose perspective. Even if the economy shrinks by 2 per cent next year, it will still be as big as it was at the beginning of 2007, and 25 per cent bigger than ten years ago. Recessions feel worse that worse actually are because of the threat of job losses. While being made redundant is awful for those who fall victim, the vast majority of people will keep their jobs. Provided that you are still in work, and can afford your mortgage, you have little to fear from a recession. Indeed, with the price of many goods expected to fall next year, you may actually find yourself better off.

 

2. The economiс recovery may come sooner than you imagine. In the past couple of months there has been almost unprecedented fiscal and monetary action to limit the length and depth of the recession. Interests rates have fallen dramatically in almost every major economy, while taxes have been cut and public spending raised. The UK economy will also benefit from the sharp fall in the value of sterling. While the efficacy of monetary and fiscal policy is debatable, these measures combined are certain to have some effect. We only have to be patient enough to wait for them to feed through to the real economy, which could take months. The Government expects the UK to emerge from recession this summer. Many think this too optimistic, but the Treasury has a better record of predicting growth than most economists over the past ten years.

 

3. You will pay less tax While the wisdom of the Government’s &20 billion "stimulus package” has been questioned in some quarters, the undeniable fact is that almost everyone in the UK will pay less tax next year. Most workers will benefit from April’s increase in the personal allowance — the amount of money that you can earn before paying income tax — and every consumer will benefit from the cut in VAT. Admittedly, this largesse will have to be paid for by higher taxes in the years ahead, but in 2009 everyone will have a little extra money to spend or save.

 

4. If you are a pensioner, your income and spending power will receive a boost Pensioners have suffered more than most as soaring energy and food bills have taken a larger share of their income. Thankfully, this trend is likely to be reserved next year. AS part of the measures announced in the Pre-Budget Report, all pensioners will receive a one-off payment of £60 in January. Then in April, at a time when prices could be falling, the basic state pension will increase by 5 per cent, from £90.70 to £95.25 for a single person and from £145.05 to £152.30 for a couple.

 

5. Energy prices will come down. The price of oil is now a third of what it was six months ago, which means that the cost of petrol should continue to edge lower despite the planned increase in fuel duty in April. Better still, domestic energy bills should also start falling. A combination of lower wholesalecosts and a welcome increase in regulatory scrutiny means that gas and electricity prices should be 20 percent cheaper by the summer.

 

6. The stock market can’t get much worse Traditional analysis suggests that equities have been oversold this year. Current valuations are pricing in a virtual Armageddon. The FTSE 100 index, for example, is yielding about 5 per cent, compared with a long-term average of 3 per cent. This suggests scope for a rally, particularly if the recession doesn’t prove as bad as many predict. That said, there remains much uncertainty, and dividends may yet fall as corporate profits disappoint, meaning that the FTSE yield is deceptively high. Nonetheless, stocks usually recover before the economy and few experts predict large falls in the coming months. Some very wise heads, such as Warren Buffet, believe that now is a great time to buy. If you are prepared to take some risk and are investing for the long term, it is hard to argue against this. Away from equities, there may also be scope to make money. My pick for 2010 would be a corporate bond fund, such as that run by Paul Causer and Paul Read at Invesco Perpetual. Their fund is yielding almost 7 per cent. Corporate bonds look to have been oversold and, even if more companies default next year, as expected, the diversified nature of the funds means that investors are well protected. With interest rates heading to 1 per cent or below, a return of 7 per cent and the potential for capital growth looks very attractive indeed.

 

7. The weather will be better OK, I can’t promise this, but it could not possibly be worse that this year, could it? While noo one really knows what 2010 has in store — for the weather or their finances — there are at least some reasons for optimism. We wish all our readers a happy Christmas and, above all, a prosperous new year.

 

 1) глупость, глупый поступок 2) обдумывать, размышлять о… 3) кошмарный 4) резко подняться 5) резко упасть/кризис 6) почти/два не… 7) поднять настроение 8) Хотя это и было тяжело… 9) посреди чего-либо 10) уменьшаться 11) уволить по сокращению штатов 12) вы окажетесь в лучшем положении 13) эффективность/сила 14) выходить из кризиса 15) министерство финансов/казна 16) отчет/письменная фиксация фактов 17) подвергать сомнению 18) (незаметно) проползать/пододвигать 19) одноразовая выплата 20) коммунальные услуги/отечественная энергетика 21) разворачиваться в противоположном направлении 22) режим подачи топлива 23) желанный, долгожданный 24) внимательное исследование 25) давать выгоду/прибыль 26) обманчивый 27) выгода 28) продавать сверх имеющихся запасов 29) разнообразный/диверсифицированный

 

1) Trying to predict the events of the following year is a journalistic …, because none of forecasts usually come true.

2) The economic situation was absolutely …, because a lot of people lost jobs and their income slumped.

3) Because of inflation all prices … and most luxury goods became unavailable for common people.

4) Recessions usually … worse than they actually are.

5) Cheap goods … disappeared from stores, only some big supermarkets still keep old prices.

6) At the time of recessions people are afraid to be made … and to lose their jobs.

7) It’s a pity that the policy concerning former colonies … . I liked the previous course better.

8) While the colonel undertook a feint retreat, he … his troops forward.

9) … payments will hardly improve the situation of pensioners.

10) The Finance Department has a positive … of the last year economic policies.