By admin On Wednesday, January 20 th, 2016 · no Comments · In

The time has come again to give a hostage to fortune by saying some things about what I think will happen in 2016. I don’t have any privileged access to the future, and so some of what I say will turn out to be completely wrong, so please don’t use this article as a guide to business decisions or even bets. It’s just a bit of fun.

Disagreement with my views, while not mandatory, is encouraged.

  1. Sport- England will win the 6 Nations

We had a horrid World Cup. But that was due to some weird decisions and the lack of a killer instinct. We were far too nice. I think we have learnt from the experience and I don’t see Eddie Jones being so keen on the diplomatic niceties if it detracts one iota from winning. Following the World Cup the best English players have looked brilliant (and there’s a few English Fijians and Kiwis etc who also look fantastic).

Bring it on!

With apologies to all my Welsh, Scottish, Irish and French readers. I hope you read on. I don’t think the Italians are under any illusions, but I hope you will read on, too.

  1. Base Rate will remain unchanged

I have thought a lot about this. Not many commentators want to take a position on 2016 interest rates. They are swayed by the USA increase, no doubt, and the seeming strength (or relative strength) of the UK economy.

But interest rate movements are profoundly political decisions despite the independence of the Bank of England, and I think that the government is only too aware of how fragile the economy actually is. It is my impression that there are a lot of businesses and households that are already very highly geared, and possibly becoming even more highly geared. These businesses and families have become accustomed to the low base rate and would struggle to manage with higher rates. What is more there are a lot of global economic threats out there which could easily derail the UK economy.

You can see the headlines now; business failures up, higher unemployment, higher repossessions. This is all stuff which has thankfully become history in our low growth but very stable economy. Stability underpins the government’s relative popularity, so I don’t see them risking an interest rate rise until they are absolutely sure that we are strong enough. The only exception to this would be if inflation was to threaten to get out of control, but I don’t see that happening in the near future.

In my judgement the recovery will remain fragile through 2016, and I don’t think inflation will become a big threat, so I think interest rates will be unchanged in 2016.

  1. There will be civil war in both main political parties.

This is a bit of a no-brainer I have to say. The Labour party is in the process of out-lawing its moderate wing which will I think split off in 2016 to form a new party. SDP mark 2, perhaps?

The Tories will do what they always do and fall out over Europe. The argument will be bitter, and never ending, or seem like it. Unlike the Labour party, though the Conservative party will not split. The lure of power will be too strong.

  1. If there is a referendum in 2016 we will vote to leave the EU

This is nothing to do with Europe which is well up there in the most interesting and fantastic continent competition (if there was one) and I love living next door to it.

Here are some reasons why we should leave:

  • Unlike other members of the EU, we have a working democracy and are quite able to run our own affairs in our own country and across the world.
  • The single market applies to goods only and is not designed for our service economy. Most of what we sell is not goods.
  • The EU has 5, yes 5, presidents. No-one knows what they do. They are appointed, not elected, and have nothing to do with actual citizenry of the EU. They are none of them much good either.
  • The bureaucracy trumps the parliament every time. The EU is a profoundly undemocratic institution which is why it doesn’t see the need to change.
  • The EU has succeeded in impoverishing many of their members putting ideals before people. That’s what Stalin did!
  • They sell more to us than we sell to them. We’ll get a trade deal on leaving.
  • They’re not taking us seriously. Dave is struggling to get what he’s asking for and it’s not much. The EU should be falling over themselves to keep the UK in. We give them street cred on the world stage and it would look very careless to lose us. This is not going to change.
  • The goal of political and economic integration is bonkers, and pointless.
  • And finally they had the cheek to ask for more money when their members were implementing austerity policies. What is even stranger, they got it.

So I hope we vote to leave the EU. I would prefer the EU to reform to accommodate us sensibly because I think we should stay friends. There are great people in Europe. They just don’t work for the EU!

PS I have read that Juncker is belatedly thinking of introducing a proposal for parallel EU’s; one which will continue the integration process and the other which will have a looser affiliation. I may vote for that, but it won’t happen before 2025.

  1. Crowdfunding will get a huge shot in the arm from the introduction of the Innovative Finance ISA.

Crowdfunding has grown phenomenally fast in the UK. From a standing start in 2010, UK investments made through crowdfunding sites now stand at about £5.5 billion ( This is a phenomenal statistic, and points to a great British success story. We are way ahead of the rest of Europe in this field. They with a much larger economy and population have invested only about £1billion.

This is a great result achieved to date without any taxation incentives.

That will change in the new tax year (starts 6 April 2016) with the introduction of the Innovative Finance ISA whereby private investors will be able to invest up to £15,240 a year through crowdfunding sites without paying tax on any resulting income or gains.

Given that the returns on debt based crowdfunding sites are about 6.26% (source Liberum Altfi index) after costs and bad debts, whereas bank accounts typically yield 0.5% to 3%, we think that the number of investors through crowdfunding sites has the potential to grow very fast indeed.

It seems that the Sunday Telegraph agrees with this conclusion. On 3 January it said that the numbers of crowdfunding investors could rise from about 100,000 now to 500,000 in 2016, and given the ISA limits the amount invested could rise from the current typical investment of £5,000 to £8,000. They think that the numbers of investors in due course will probably swell into the millions.

And why not? Invest through Go2 Business Loans, get a great return on your money and make a real difference to local business.

Note:  Investments through crowdfunding sites are not covered by the Financial Services Compensation Scheme, and so there is no compensation for losses.

  1. At last the localism agenda will gather strength

The Localism Act of 2011 was intended to heighten the “sense of participation and involvement on which a healthy democracy thrives”. You would be forgiven for thinking that not much has happened since then, and I would agree. There has been talk of locally elected mayors, but few have been elected. However where that has happened such as in Bristol the experiment has seemed to have been very successful even if controversial.

Part of the intent of that Act was to give more power to local people to exercise control over developments in their communities, but I am not convinced that local authorities are that keen or used to allowing local communities to make things happen themselves. I would like to see that change in 2016.

One of the innovative features of Go2 Business Loans is to allow what we call “community projects”; the local shop or pub for example, to raise loans through the Go2 crowdfunding site so that local people can develop their own communities to improve their and their neighbours’ lives, in other words “Local Money for Local Business”.

  1. The construction industry will grow.

It’s a good time for the construction industry. There are low interest rates, the economy is growing, investment decisions are starting to be made and there’s going to be lots of housebuilding. There can’t not be. The government can’t, and isn’t, trying to duck the question anymore.

So Nolan Davis Contracting Limited will have a good year. Just as well because I bought the company in November 2015.

  1. The NHS will start to turn around.

How boring is the NHS, and it’s always the same story; more demand, management failures, heroic nurses and doctors putting their thumbs in the dyke. Most of all there is not enough money.

I don’t know why we are surprised at any of this. You offer for free something seriously valuable, like world class health care for all acute and chronic conditions, without any serious barriers to entry for anybody, and you find that the organisation is over-run by demand which grows and grows and will do ever more.

The NHS can break the country if demand is not controlled.

The NHS principle is that care should be free at the point of delivery. This is a fantastic ideal, and it makes the UK a terrific place to live, but it’s an offer without limits, which has to be paid for by people with very restricted limits on what they can or will pay. It will only work if the offer, the care, is tightly defined, and the system is not abused. Neither sadly is true.

What can be done? Supply can be increased but this will be limited and will take time. I happen to think and hope that some of this problem can be solved by clever technologies coming down the track which could improve the success of cancer and other treatments dramatically, and by so doing reduce the cost of chronic care.

Nothing can be done to prevent ageing but we can take steps to enter the later stages of life in better shape. Whatever we can do to control obesity (throughout life) and drug abuse, in which category I include alcohol and smoking, the better.

We will see more largely politically motivated public messages aimed at getting us to drink less, smoke less and eat less sugar and saturated fats, and to take more exercise. This is a bit brave because it involves criticism of the electorate, which is likely to be countered by vituperative criticisms of the political class.

We may also, but I consider this to be more unlikely, start to talk about the abuse of the NHS. This will start with simple stuff like how to prevent people not turning up to appointments, limiting the use of scarce resources (A&E and GP’s) for trivial complaints, stopping health tourism and so on. This debate is long overdue.

It’s politically dangerous, because it threatens ideas that are deep in the national psyche. The NHS is the closest we have to a national religion, as Danny Boyle said, and because we none of us pays for our treatment directly we think it’s free and our God given right.

So my bet is that in 2016, we will see a start in the long process of changing the main structural factors that threaten the NHS, and the country and start to get it back to what it should be doing.

  1. At least one technological breakthrough will start to make a fundamental difference to how we do things, for the good.

I am a great optimist that whatever the challenge we humans have the brainpower and determination to invent and apply products, systems and methods which will overcome the challenge and allow us to live better than before. Where do I start? There’s lots of this stuff out there from the development of graphene, to new ways of identifying cancer cells, to better batteries and to smarter applications of agricultural herbicides.

I will talk briefly about the last of these first because I know a little about this from first -hand experience.  I have been working with a client for the last three years who has, in spite of the odds (and the best efforts of the EU single market (joke)) developed and patented a fantastic methodology for the manufacture of agricultural pesticides, which enables the active ingredients which kill the weeds to be five times as effective as conventional pesticides. The net effect is that we can reduce the use of herbicides by a factor of five with consequent benefits for the environment and for the cost of production. Combine that with a low cost drone that can survey the farmer’s fields and identify where the herbicide is needed, and the use of herbicides can fall precipitously. Simple, elegant, brilliant.

I don’t know a lot about medical innovation. From what I do know though it seems that we are increasingly able to look inside the body so that we can find cancers for example and target the treatments. Targeting has to be the way to go. Many medical treatments are pretty shotgun in their application and can do more damage than the disease, at least in the short term.

It’s win:win:win, targeted treatments are more effective in dealing with the disease, easier on the body and so lower intensity in terms of after care, and because of that cheaper for the NHS to deliver. Just fantastic.

I will stop now. I have probably already made a fool of myself; but keep an eye out. There are loads of other marvellous (in the true sense) technologies out there which have yet to come to market; just think of graphene, a sheet of carbon one atom thick with 100 times the strength of high tensile steel and extraordinary conductive properties, and the related lithium air battery technology which promises to produce a battery which has the same energy intensity as petrol. What then? The world becomes a different place as our current limitations start to evaporate.

If you’re not excited about the future, you should be.

  1. Owner manager company sales will grow in 2016.

FPN has had a good year in 2015 and is developing very nicely as a niche provider of Corporate Finance services, in particular share sales, to owner managed companies. The market continues to be hard as investment decisions are still slow and difficult, but with hard work and clever marketing deals can be found, and done. We find that our clients appreciate our creative and focussed marketing approach as well as our understanding of the accounting and other issues which determine the structure of deals.

We go into 2016 with a good pipeline of deals and we believe good growth prospects.

We have also had a successful year doing expert witness work in disputes involving insolvency, accounting issues and professional conduct. We expect this to continue into 2016.

Antony Fanshawe is a founder and director of FPN Limited and Go2 Partners Limited. He is also the owner and managing director of Nolan Davis Contracting Limited.

Image credit: App Advice