The history of Crowbond dates back to when Kerim’s father, at just 16 years old, purchased his first grocery store on Hackney Road, east London, which was oddly named Crowbond Groceries. This initial venture led to increasing demand for delivery services, prompting him to transition away from the store to focus on deliveries. Following his father’s guidance for five years, Kerim took over the daily operations of the business around the age of 23. Since then, it’s been his passion project.

Key Principles Driving Our Success

Our success can be attributed to our proactive approach to technology, which allows us to improve efficiency and maintain a clear understanding of our operations. Conversely, we emphasize a strong focus on fundamental business practices. Unlike many new entrepreneurs who prioritize flashy marketing, we dedicate ourselves to the core elements that truly matter: product quality, service excellence, and fair pricing.

Product Quality Matters

We ensure that we stay closely connected to the market and the products we provide. Our team operates nightly to guarantee that our offerings are as fresh as possible. With daily purchases and swift turnover, we avoid overstocking and resist the urge to chase lower prices at the expense of quality. As the saying goes, “Customers will remember a bad product far longer than a high price,” which is crucial in our industry.

Market prices can fluctuate, but delivering low-quality products creates lasting negative impressions.

Commitment to Service

Assessing service quality is subjective and can differ from person to person. My definition of good service centers around the commitment to meet customer needs, regardless of the business cost. If this means dispatching a product via Uber or personally handling a delivery on a Sunday morning, we do what it takes to ensure customer satisfaction.

Arriving on time with the correct product is just the baseline of good service. Going beyond expectations can lead to a lasting positive impact on the customer experience. Issues can transform into opportunities to win customer loyalty, especially when resolved effectively.

Understanding Market Pricing

Every product carries its own value, and while service is not a tangible item, it certainly has worth. It’s essential to assess pricing in relation to product value and the cost of delivering that service while also ensuring the business is profitable. Striking a balance between fair pricing for customers and sustainable profit is key to longevity in business.

As a trading business operating in a day-to-day market, there’s the temptation to exploit price fluctuations. However, our goal is to stabilize prices to benefit our customers. We don’t chase the competition; instead, we focus on our sensible pricing strategy that ensures profitability while serving our clientele fairly.

Leadership and Team Culture

Leading by example fosters a culture where employees align with our service philosophy. The more like-minded individuals we attract, the stronger our foundation becomes. Our team members are ingrained with this culture, leaving little room for deviation. Those who don’t share our commitment will find it challenging to thrive in our environment.

A hard-learned lesson is to be uncompromising in dealing with underperforming staff. The current labor market can tempt businesses to accept mediocre performance, but this undermines the foundation we strive to build.

Balancing Responsibility and Personal Life

The culture propelling our business forward brings a sense of responsibility to lead effectively. I often find myself working nights to support various shifts and reassure employees of our shared commitment.

Future Aspirations

I admire those who pursue personal hobbies like golf, but my focus on business growth remains paramount. With my wife expecting our first child, it would be easy to slow down, but I envision a much larger future for the business. As we develop our management structure and explore marketing, branding, and technology, I feel we’re just scratching the surface of our potential.

No Time for Paternity Leave

While many would consider taking paternity leave, my commitment to the business means I will likely continue working, even during such a pivotal moment. The entrepreneurial lifestyle demands all-in engagement, leaving no room for half-measures.

Kerim Suavi shared his insights on business principles during a conversation with Richard Tyler.

The Financial Conduct Authority (FCA) has announced plans to evaluate the lending capabilities of banks, aligning with the government’s initiative to stimulate economic growth. Similarly, the Bank of England’s financial policy committee received directives from Chancellor Rachel Reeves to enhance accessibility to homeownership.

This raises questions about the implications for the broader housing market.

Real estate analysts anticipate that the FCA will reconsider its stress testing measures, which ensure that borrowers can manage their loans even if interest rates rise. Currently, banks must conduct stress tests at a rate 1 percentage point above the anticipated Bank of England base rate. For instance, if a borrower’s mortgage rate is 4 percent and the forecasted Bank rate is 5 percent, the stress test would ascertain whether they could afford a 6 percent payment.

Charles Roe from UK Finance commented that eliminating this stress test could streamline the rules. He noted, “It is quite complicated and limits the number of individuals eligible for mortgages.”

The number of first-time buyers has notably decreased from 351,260 in 2019 to 287,060 in 2023, as reported by UK Finance. Additionally, a survey conducted by the Building Societies Association revealed that 48 percent of 2,000 adults polled cited inadequate borrowing capacity as a significant obstacle to purchasing a home.

Historically, stress testing measures were even stricter. Prior to August 2022, banks were required to evaluate whether borrowers could sustain payments at rates 3 percentage points above their lender’s standard variable rate (SVR), which tend to be higher than fixed rates. The removal of this requirement could enable an additional 30,000 individuals to borrow more, according to the Bank of England.

David Fell from Hamptons estate agency indicated, “If all lending restrictions were lifted, it could potentially generate an additional 100,000 to 150,000 transactions annually, benefiting both first-time buyers and existing homeowners looking to move.”

Financial institutions assert that the relevance of the stress test has diminished, as mortgage rates, which surged from 2021 to 2023, are now on a downward trend. For example, the average two-year fixed mortgage rate increased from 2.34 percent in December 2021, while the Bank rate was at a historic low of 0.1 percent, to 6.85 percent in August 2023, when the Bank rate reached 5.25 percent.

Currently, the average two-year fixed rate stands at 5.51 percent, with the Bank rate at 4.75 percent and projected to decline this year.

The anticipated market impact: While a reduction in mortgage rates may lessen the effect of eliminating the stress test, it could still provide a slight market boost.

Increasing Loan Limits

Since 2014, banks have been restricted to offering loan-to-income ratios of 4.5 or more to just 15 percent of borrowers to mitigate the risks associated with loaning practices that contributed to the financial crisis of 2007-08.

Paul Broadhead from the Building Societies Association is hopeful that the Bank of England will reassess this limit as part of the government’s initiative to promote homeownership.

According to Nationwide Building Society, the average property purchased by a first-time buyer in the final quarter of last year cost five times their average salary, rising from 4.8 times in early 2014 and 2.3 times in 1994.

In London, first-time buyers faced an average property price that was eight times their salary, compared to 8.1 times in 2014 and 2.8 times in 1994.

Felicity Holloway from Moneybox Mortgages remarked, “Many renters manage high rental payments and save for deposits but are often hindered from homeownership due to strict income multiple regulations that don’t reflect their ability to pay.”

Many traditional lenders typically allocate their higher income ratio loans to individuals with larger deposits or higher incomes. For instance, HSBC will lend up to 5.5 times income for those earning £100,000 or more.

Broadhead suggested, “If lenders could offer more substantial loan-to-income loans, it would open up opportunities. The Bank of England could stipulate that any additional lending quotas be directed to first-time buyers.” The anticipated market impact: Enabling first-time buyers to borrow more could assist them in entering the market, thereby lifting property values.

The Possibility of Interest-Only Mortgages

The availability of interest-only mortgages has largely been restricted to wealthier individuals since 2014, as lenders require evidence of borrowers’ plans to repay the principal at term end. For example, Halifax mandates an annual income of £75,000 (£100,000 for joint applications) and a minimum 25 percent deposit for those seeking such mortgages.

The Building Societies Association advocates for government policies that would facilitate more partial interest-only and partial repayment loans, allowing first-time buyers to pay a 5 or 10 percent deposit and maintain a 75 percent loan-to-value repayment mortgage, while keeping the remaining 20 or 15 percent as interest-only to lower monthly payments.

For example, a £200,000 repayment mortgage over 25 years at 4 percent costs £1,056 monthly; however, if £40,000 is interest-only, the monthly payment would decrease to £978. The potential market impact: This could assist first-time buyers, although lending caution may still prevail among banks.

Potential Rise in Property Values

Hamptons noted that during the stamp duty holiday from July 2020 to June 2021, when buyers only paid duty on properties above £500,000, average house prices climbed by 11 percent, from £236,687 to £263,552, as first-time buyers surged into the market.

An increase in property prices may benefit existing homeowners, especially those downsizing in more affordable areas, but it could also compel first-time buyers to incur even greater debt.

James Daley from Fairer Finance cautioned against such risks, stating, “Ultimately, it comes down to affordability. There is a crucial need to avoid creating situations where individuals overextend themselves financially.”

“By continually attempting to stimulate the housing market, we are not addressing the fundamental issue that home prices are excessively high.”

The FCA indicated that any modifications to the rules will go through a consultation process.

The chief executive of the Bank of England’s Prudential Regulation Authority, an enthusiastic windsurfer, took up winging during the pandemic after discovering the sport through YouTube videos.

“It looked fun, so I treated myself to a wing foil for my fiftieth birthday and began learning the ropes,” Woods shared.

On that stormy weekend in Teignmouth, Devon, Woods found himself navigating the waves, joking that he spent not a small amount of time falling off his board.

Reflecting on his experience, he recounted an encounter with a fellow water sports enthusiast who questioned his sanity for braving the stormy conditions.

Woods, 51, who also serves as deputy governor of the Bank, acknowledges his risk-taking nature. He noted, “If someone in my position didn’t embrace risk, they’d likely find their role quite dreary.”

His philosophy may resonate positively with Chancellor Rachel Reeves, who has called on regulators to adopt a bolder approach to risk to stimulate the lackluster UK economy. Woods’ inclination towards risk could also be intriguing to City executives who have long criticized the Prudential Regulation Authority and other watchdogs for their conservative stance and heavy regulations.

In the aftermath of the 2007-09 financial crisis, regulatory environments have tightened significantly, and much of Woods’ career has centered on formulating these regulations.

Originally from New Zealand, Woods was educated at Winchester College and later the University of Oxford. He began his career in the Treasury in 2001, where he played a pivotal role in establishing UK Financial Investments to manage government stakes in the banks that received bailouts.

Woods contributed to the Independent Commission on Banking, which implemented ring-fencing measures to enhance the safety of financial institutions during future crises. Eventually, he transitioned to the Financial Services Authority, helping to create the Prudential Regulation Authority and the Financial Conduct Authority. He rapidly ascended to lead the PRA in 2016 and is currently nearing the end of his second five-year term, which concludes in June next year without the possibility of extension.

His remaining tenure is likely to be defined by Reeves’ campaign for regulatory reform, with Woods recognizing that this represents a key moment for the City’s regulators.

“We are clearly at a pivotal point,” he commented, indicating a time to reassess regulations since completion of the post-crisis rebuild.

The objective remains to ensure system stability while asking, “Is there an opportunity to streamline the regulatory framework?”

Woods suggests that there is potential for simplification, stating, “We’re aiming to clear away unnecessary complexities while maintaining essential oversight.”

Both the PRA and the FCA are under increasing scrutiny from Westminster and within the City to demonstrate their contributions to enhancing the economy. In 2023, the government assigned them a secondary statutory objective focused on improving the UK’s international economic competitiveness.

Although this new goal ranks below the PRA’s core mission of ensuring the safety of financial entities and protecting insurance policyholders, it gains prominence, especially after the economy stagnated in the latter half of last year.

Executives within the financial services have voiced growing concerns over the regulatory landscape, arguing that regulators have not fully capitalized on the freedoms provided by Brexit. Reeves has aligned with this viewpoint, affirming in November that regulations aimed at curbing risk-taking have been excessive. Reports indicating Santander’s frustrations with the UK’s regulatory climate and potential withdrawal from retail banking have intensified these discussions, despite the bank’s insistence that it has no plans to sell its UK business.

Nevertheless, Woods asserts that the PRA is already making strides toward its new objectives, including removing the cap on banker bonuses post-Brexit and adapting international capital standards, known as Basel 3.1, to enhance the competitiveness of UK banks.

Further changes are anticipated, with the authority currently consulting on adjustments to bonus regulations and evaluating measures to reduce the reporting burden on banks. Proposals have also surfaced regarding the establishment of a “concierge service” to assist foreign financial entities interested in entering the UK market.

While critics might argue that easing regulations could create future crises, Woods is confident: “I don’t believe anything we’re currently undertaking poses a high risk of reintroducing issues similar to past crises.”

For instance, the previous cap on bonuses, which aimed to deter risky behavior in banking, hasn’t resulted in concerning compensation practices since its removal. “We’re monitoring the situation closely and have no pressing concerns about current practices,” Woods reported.

When discussing the potential for political interference in British regulation, he asserted, “It’s concerning if government input leads regulators to stray from their core mandates. Fortunately, that’s not the case here.”

However, the evolving regulatory landscape presents ongoing challenges.

Concerns have emerged regarding shadow banking, which includes hedge funds, pension schemes, and insurers that have rapidly expanded over the last decade. Regulators have highlighted the risks posed by this largely unregulated sector to financial stability, evidenced by incidents like the crisis following the 2022 mini-budget.

Yet Woods is skeptical about a major tightening of regulation for non-bank entities, either domestically or in other jurisdictions, indicating that the regulatory focus will shift towards enhanced surveillance techniques.

This shift is partly due to a focus on growth and competitiveness as well as the need for proportional regulations, which also relies heavily on international cooperation.

When prompted about his primary concerns, Woods pointed to two aspects of shadow banking: the swift ascent of private credit and the rising trend of funded reinsurance deals involving international firms made by life insurers. He also highlighted persistent threats from cybersecurity issues.

Looking ahead, Woods faces uncertainties regarding the American approach to Basel reforms, having postponed the introduction of these standards for the third time until January 2027, influenced by the unpredictability of US implementation under President Trump. There’s speculation regarding the US potentially abandoning Basel altogether. However, Woods believes this is unlikely since major US banks benefit from a level playing field.

Nonetheless, if the US opts out, “it would pose significant global challenges.”

As Woods approaches the end of his term, he reflects on his achievements at the PRA while also contemplating future opportunities—either in the public or private sectors. He quipped, “I hope to have time to pursue another significant role, provided I stay afloat on my wing foil!”

Having struggled to find reasonably priced insurance for his Volkswagen Polo, Simpson found what looked like a great deal on Instagram promoting low-cost car insurance. Now 20 years old, he purchased six months of coverage for £562, a rate significantly lower than any other quotes he had received.

It was only after a minor accident that he learned the truth. Upon contacting Aviva, whom he believed to be his insurer, he discovered he had fallen prey to a ghost broker—someone selling fake or non-existent insurance policies online.

“Aviva informed me that there was no record of my policy, and I was driving without insurance. I felt devastated,” he recounted.

Simpson expressed the immense pressure young people face regarding driving costs, particularly insurance. “The price of driving is a significant issue for my age group. Some friends have even chosen not to drive because of it,” he added.

“When I saw that deal, it seemed legitimate and the price was enticing, so I jumped on it. The documents looked quite convincing.”

Rising Costs for Young Drivers

According to consumer site Go.Compare, the total expense of getting a driver aged between 17 and 25 on the road—including first car acquisition—rose by 19% from £5,947 in 2023 to £7,100 last year.

Car insurance rates have dramatically increased. A new 17-year-old driver now pays an average of £2,727 annually, which is over double what they would have paid in 2021—£1,221—and significantly higher than the current average of £861 across all age groups, according to Confused.com.

Declining Young Drivers

The number of young drivers has sharply decreased since the pandemic, struggling to return to pre-pandemic levels. In March 2020, 3.32 million individuals aged 17 to 25 had a full driving license, dropping to 2.97 million by April 2021, and recovering only to 3.1 million by September last year—a decline of 6% from before the crisis.

For those who are driving, many are trying to avoid soaring insurance costs. In 2023, a record 6,316 drivers aged 17 to 20 were convicted of driving without insurance, an increase of 117% since 2021.

“Insurance premiums have skyrocketed for younger drivers,” stated Rhydian Jones from Confused.com. “This trend is due to rising claim payouts insurers are facing and their escalating costs. Since younger individuals generally have less driving experience, they are categorized as higher risk, leading to increased premiums. This significant rise in costs may compel young drivers to explore alternative options to manage expenses.”

Young Drivers Targeted by Fraud

Aviva highlighted a concerning statistic: 30% of young drivers have purchased insurance from fraudsters misrepresenting themselves as legitimate intermediaries via social media.

“The findings are alarming,” said Pete Ward, head of fraud at Aviva. “We have been encountering more of these incidents recently, which is quite concerning.”

The Insurance Fraud Bureau, backed by insurers and cooperating with law enforcement to combat fraud, explained that ghost brokers often operate through social media and word of mouth.

Some individuals obtain policies from genuine insurance firms using false details, such as fake age or employment status, while others submit completely fabricated policy documents, as experienced by Simpson.

Aviva reported that four-fifths of young drivers surveyed had come across social media advertisements for cheap, possibly fraudulent car insurance. When asked why they might consider purchasing from social media brokers, 15% noted they couldn’t afford other quotes.

A staggering 89% of those who secured insurance through social media faced significant repercussions, according to Aviva’s survey of 2,000 drivers aged 17 to 25. One in six reported being stopped by police for driving uninsured.

Aviva identified multiple victims of the ghost broker that deceived Simpson, who were also sent authentic policy pamphlets from Aviva and a forged certificate featuring the insurer’s branding alongside the broker’s name. None of the affected drivers possessed actual insurance, and their vehicles did not appear in the Motor Insurers’ Bureau database, which tracks insured vehicles.

Driving without insurance may result in a £300 fine and six penalty points. If the case is escalated to court, this could lead to a driving ban or an unlimited fine, and police are authorized to confiscate uninsured vehicles.

Without insurance, those involved in an accident may face costly liabilities that could exceed tens of thousands of pounds. If personal injuries result, individuals may also be required to compensate for damages.

Last year, Aviva canceled or terminated almost 17,000 policies due to application fraud and identified about 7,000 cases where ghost brokers sold counterfeit insurance.

Ward cautioned young drivers, “If an offer seems too good to be true, it likely is. Avoid engaging with any business exclusively operating on social media, especially those that only communicate through messaging apps.”

Dishonesty with Insurers

Some young drivers are tempted to lower their costs by depicting their parents as the primary drivers of their vehicles.

Insurance quotes depend on the primary driver’s risk assessment, influenced by age and claims history. Younger drivers face higher costs due to perceived risk, but adding an older individual as a co-driver can lessen the overall premium impact.

However, inaccurately listing a secondary driver who is actually the main driver is illegal—a practice known as fronting. Aviva’s survey revealed that one in six young drivers admitted to this practice.

In 2023, 583,000 insurance applications were flagged as fraudulent, marking a 17% increase from 2022, according to the Association of British Insurers.

Those caught fronting may encounter substantial fines, increased insurance rates, and significant expenses if their insurer denies a claim. They could also risk acquiring a criminal record.

“Many young drivers view fronting as a trick to secure cheaper insurance, but it is indeed a type of insurance fraud,” Ward warned. “This behavior brings serious consequences, and it seems many are unaware of that.”

While some may believe they can easily evade detection with fronting, insurers often examine who was operating the vehicle during a claim and may delve into further investigations if suspicions arise.

Financial Challenges in Learning to Drive

Driving lessons have also become more expensive. The Driver and Vehicle Standards Agency reports that learners typically require 45 hours of instruction and an additional 22 hours of practice before passing their driving test. According to the RAC, lessons average £45 per hour, which is £10 more than in 2021, bringing the total cost for 45 lessons to approximately £2,025.

Acquiring that first vehicle is also becoming increasingly burdensome. Drivers aged between 17 and 21 spent an average of £3,000 on their first car in 2024, up from £2,780 in 2023, based on Go.Compare data. The availability of used vehicles priced under £5,000 has dropped by 75% since 2015.

AA Finance found that 29% of individuals aged 18 to 34 are stretching their finances to lease cars instead of purchasing them outright.

Neglected Vehicle Safety

The rising costs of car repairs are leading some young drivers to delay essential maintenance, such as replacing tires or skipping MoT tests, according to the RAC.

Their research indicated that 36% of under-25s avoided routine upkeep and repairs in 2024 to save money, an increase from 26% in 2023. Furthermore, 50% of under-25s would struggle to cover a repair cost of £500 or more, contrasting with 25% of drivers over the age of 65.

Strategies for Lowering Insurance Costs

Interestingly, comprehensive insurance—the highest level of cover—often turns out to be the most affordable option. Confused.com states that the average cost of third-party insurance for drivers aged 17 to 25 is £3,788, while fully comprehensive coverage averages £2,279.

Younger drivers can consider telematic or “black box” insurance, which monitors driving behavior and can reduce premiums for safer driving patterns.

Additionally, temporary insurance on a parent’s vehicle can be a viable option for those who drive infrequently or require short-term coverage during the summer. This could cost around £41 per day, with longer policies resulting in a reduced daily rate.

Adjustments to job titles on insurance applications can also yield savings. For instance, a chef might pay £549 for coverage, while a cook could face only £384, highlighting the significance of being strategic with job descriptions.

Typically, it’s suggested that younger investors embrace higher risk due to their extended horizon to weather market fluctuations. Conversely, older investors, with the need for accessibility in the near future, are advised to avoid such risks.

This advice seems questionable on several fronts.

If you’re just starting out with a relatively small investment, any loss can be significantly discouraging, potentially deterring future investment endeavors.

Further, suggesting high-risk tolerance to novice investors who lack substantial market knowledge and time to manage complex portfolios seems imprudent.

Advising newcomers to venture into high-risk assets is akin to having a beginner pianist perform Mozart’s Rondo Alla Turca; it’s more sensible to build proficiency gradually.

On the flip side, older investors might have greater investment knowledge and more time to manage their portfolios, especially post-retirement. Directing them exclusively toward low-risk options could be limiting.

Conventional advice correlates risk aversion with increasing age, symbolized by a downward sloping line on a risk-age chart.

My initial investment years adhered to this advice, with my riskiest choice being an investment trust in frontier markets. The experience, though educational, didn’t yield favorable financial returns compared to a standard tracker fund.

Perhaps, instead of this linear approach, a bell curve model might be more fitting. Start with caution, increase risk with experience and wealth, and then reduce risk, but not entirely, upon nearing retirement.

For new, young investors, starting with a low-cost ready-made portfolio via major investment platforms might be prudent. These portfolios, comprising various tracker funds, balance risk across assets like equities, bonds, and property, providing stability. A regular small investment, such as £50 monthly, can set a foundation.

At my mid-thirties, it’s time according to this bell curve model to increase risk. My current equity-focused portfolio is globally diversified but could benefit from further diversification within investment trusts focusing on regions like Asia and India, without overloading on risky funds.

Eventually, introducing bonds into the portfolio can offer a counterbalance to equities, beneficial both in retirement for regular income and for younger investors through reinvestment opportunities.

Traditional strategy often advises exiting the stock market by retirement to avoid risking savings. However, this might be the time to apply expanded investment knowledge and engage in hobbyist investing, exploring individual stocks.

Therefore, consider individualizing your risk strategy. It’s not solely about age; it involves your knowledge, experience, and the effort you’re willing to invest. Your investment journey might not align strictly with age-based advice and should cater to your personal growth curve.

Sanjay Shah, aged 54, was identified as the mastermind behind a complex trading operation known as ‘cum-ex,’ which illicitly acquired 9 billion Danish kroner through phony dividend tax refund applications between the years 2012 and 2015.

In addition, he was convicted of attempting to defraud the state of an extra DKK 553 million (£61.3 million). The court also mandated the seizure of DKK 7.2 billion from Shah.

Shah, who was extradited from Dubai last year, appeared at the court in Glostrup, a suburb of Copenhagen, donning a Christmas elf hat. He denied any misconduct, claiming he merely exploited a legal loophole that rendered his trades lawful.

Prosecutors pursued the maximum sentence of 12 years, which represents the longest prison term for economic crimes in Denmark. Shah’s legal counsel announced intentions to appeal the decision.

The fraudulent activities, directed by Shah’s investment firm Solo Capital Partners based in London, involved rapid trading of shares around the time of dividend payouts, creating a façade of multiple ownerships that appeared eligible for tax refunds, according to prosecution sources.

In court, Shah stated that the trading facilitated participants in claiming share ownership, thus becoming entitled to tax refunds without ever owning the shares or paying dividend taxes in Denmark.

The term ‘cum-ex’ refers to the acquisition of an equity position ‘cum’ (with) dividends in a jurisdiction that offers favorable tax conditions. Once the dividend is paid, shares are then returned ‘ex’ (without) dividends to their original jurisdiction.

These types of schemes are believed to have cost several European nations—including Germany, Austria, Italy, France, and Belgium—billions in lost public revenue.

Shah and his firm Solo Capital Partners are currently facing a civil lawsuit in the UK initiated by Denmark’s tax authority, seeking to reclaim £1.4 billion in refunds.

Investigative efforts spearheaded by Germany and Denmark have led to raids on banks, multiple arrests, and several prosecutions. Denmark has charged multiple British and American nationals involved in these fraud schemes.

In Germany, hundreds of individuals are under investigation for similar cases, with several lawyers, bankers, and asset managers already sentenced to prison.

In short, it’s crucial. A review of my self-invested personal pension (Sipp) reveals that approximately one third is allocated to US investments, which is more than any other country — a situation many other investors likely find themselves in without realizing it.

The primary reason for this is the significant role the US plays in global financial markets. The MSCI World index, which tracks the largest companies by market capitalization worldwide, has the US accounting for 72 percent of its total. Notably, all of the world’s top ten companies are based in the US.

Moreover, the United States continues to lead as the largest economy and is a vital market for international businesses across various sectors, including consumer goods and technology. A downturn in the US economy would not only affect American companies but also have wide-ranging repercussions globally.

The current election cycle adds to the uncertainty, with candidates polling closely. The electorate is polarized, with each group fearing the others: Trump is viewed as “anti-democratic,” while Harris is labeled as “proto-communist.” There’s no assurance that supporters will accept the outcome of the election, heightening the sense of impending crisis.

The US stock market already shows signs of fragility, with a remarkable concentration in a few major tech firms, often referred to as the Magnificent Seven (Apple, Amazon, Alphabet, Meta, Nvidia, Tesla, and Microsoft). These companies, despite their impressive performance, now represent around one third of the S&P 500 index, and concerns are growing among investors. There was significant market volatility earlier this summer, and even Nvidia’s remarkable 122 percent profit increase did not impress investors.

Many of these tech stocks appear costly amidst emerging issues related to social media, tax compliance, and regulatory challenges. While the transformative potential of artificial intelligence could lead to significant advancements, it also poses risks.

The policies of each presidential candidate regarding these companies will likely be influential. Richard de Lisle, the manager of the VT De Lisle America fund, noted that Harris’s critical stance on large corporations could affect investment strategies. “She may take a more confrontational approach towards the monopoly power of these companies,” he observed. Given the current climate around social media, regulatory interventions are becoming more necessary, and Harris might take a responsible approach to AI regulation.

In contrast, Trump’s stance might favor traditional industries over tech. David Coombs, manager of Rathbone multi-asset portfolios, highlighted that a Trump victory could benefit the automotive sector through tariff protections while potentially harming retailers due to inflation and reduced competition.

“The construction sector might thrive if manufacturing jobs are reshored, and financial stocks could gain from reduced regulations,” Coombs explained. However, this scenario does not bode well for the tech giants.

Investors have generally profited from holding S&P 500 index trackers for US exposure, yet it may be prudent to reconsider focusing on tech. More active management strategies through funds like Premier Miton US Opportunities may provide better opportunities by emphasizing domestic stocks poised to benefit regardless of the election outcome.

Should investors consider significantly reducing their US holdings? While the US has been a favorable market over the past decade, vulnerabilities are emerging. The national debt now exceeds $35 trillion, with debt repayments consuming a staggering 76 percent of personal income tax revenue as of June, according to conservative think tanks. Other countries facing similar debt levels would likely be in crisis.

Neither Biden nor Trump appears inclined to confront the deficit. Trump advocates for tax cut funding, while Harris pushes for increased spending. Edmund Harriss, chief investment officer at Guinness Global Investors, indicated that various projections suggest Harris’s plans could add $1-2 trillion to the debt, while Trump’s could escalate it by $5-6 trillion.

Harriss believes that both candidates should be cautious of the escalating deficit and climbing interest costs associated with public debt. However, it remains uncertain if either candidate will heed this warning. Concerns might arise among international bond investors, potentially inflating borrowing costs. The US, despite its geopolitical weight, cannot afford to presume immunity from market reactions.

As David Roberts, co-portfolio manager of the Nedgroup Investments Global Strategic Bond fund, put it, “At least one presidential candidate has threatened to disrupt established fiscal norms, creating valid reservations about the US bond market.”

Another major risk stems from the possibility of inflation resurgence. Both candidates seem inclined toward tariffs, particularly Trump, who proposes import tariffs of 10 percent and as much as 60 percent on adversarial nations like China. Such measures could drive inflation higher, potentially escalating interest rates and borrowing costs.

This volatile scenario could warrant caution concerning US investments moving forward.

Additionally, global investments cannot be overlooked. Coombs noted how Trump’s comments on Taiwan affected the share price of Taiwan Semiconductor Manufacturing Company, which fell by 8 percent in one day. “Whether one supports him or not, Donald Trump influences market movements and contributes to volatility,” he commented.

Coombs has also increased his focus on European defense firms, as he anticipates Trump’s influence may push European leaders to operate independently regarding defense strategies.

Ultimately, the unpredictable nature of the election holds significant implications. Trump’s more extreme proposals, such as altering the central bank’s independence and undermining regulatory bodies, threaten economic stability.

While investors have become accustomed to his rhetoric and learned to prioritize actions over words, these statements still bear the potential to create market disruption. Harriss cautions, “In the short term, political developments can unsettle markets, prompting investors to steer clear of specific economies. The UK’s recent experiences under Truss demonstrated this phenomenon in G7 economies, and the same risks could manifest in the US.”

Given the unpredictability of the election outcome, caution remains a sensible approach for investors observing the figurative horse running through the operating room.

Ian Cowie is currently unavailable

The bank’s operating pre-tax profits for the quarter ending September soared by 25.7% to approximately £1.7 billion, surpassing the City analysts’ forecast of £1.5 billion. This positive performance led to a momentary spike in the bank’s shares, reaching their highest point in over nine years.

Despite this profit increase, NatWest did register a larger-than-expected provision for potential bad loans, amounting to £245 million during the period. This provision was partly attributed to a £109 million impairment within its commercial and institutional division. Analysts had predicted bad loan charges around £173 million for the same timeframe.

Paul Thwaite, the bank’s CEO, commented that while impairments in the commercial division are usually minimal, they can occasionally be significant. He refrained from naming specific clients, but it is noted that NatWest has lent to Thames Water, which is currently facing financial difficulties, contributing to the bank’s increased credit loss provisions.

Despite these challenges, Thwaite emphasized that NatWest’s underlying impairments are still at a low level and celebrated the strong performance of the bank.

During the quarter, customer deposits increased by £2.2 billion, bringing the total to £427.4 billion. Lending also rose by £8.4 billion to £363.7 billion, aided by a £2.3 billion rise following the recent acquisition of a mortgage portfolio from Metro Bank.

This strong growth led NatWest to revise its forecasts for the full year, predicting a return on tangible equity exceeding 15%, an improvement over the previous expectation of above 14%.

Analysts at Jefferies described the results as a strong overall performance. On the market, shares closed up by 2p, or 0.6%, at 364p on Friday.

This announcement is beneficial for Thwaite, who took the helm in July of the previous year after the abrupt departure of Dame Alison Rose, his predecessor, following controversies related to Nigel Farage’s bank accounts.

As one of the major lenders in Britain, NatWest has about 16% public ownership, a result of a £45.5 billion bailout during the financial crisis.

The government has been gradually decreasing its stake in NatWest through a planned trading strategy, but there is speculation about a possible larger share sale to institutional investors, similar to past transactions.

Concerns about the upcoming Labour government’s budget, which may include tax increases, are creating uncertainty for NatWest and the broader banking sector. Thwaite noted that while the UK economy showed unexpected strength this year, recent months have seen a slight decline in business and consumer confidence due to ongoing uncertainties.

He added, “This uncertainty extends beyond the UK budget, encompassing the US elections and various geopolitical tensions as well. While spending on smaller items has increased, consumers are postponing larger purchases and saving more than they did prior to the pandemic.””

UK Finance, a trade association, reports a staggering 22 percent decline in the number of first-time buyers in 2023, with 287,000 individuals purchasing homes, a drop from 370,000 in 2022.

Although conditions have seen some improvement this year, Savills highlights that the average price for first-time buyers has risen for the sixth consecutive month, reaching a record £242,789, surpassing the previous high of £241,900 recorded in September 2022.

After experiencing two years of stagnant housing demand due to high inflation and escalating mortgage rates, compounded by market turbulence following the Conservative government’s mini-budget in September 2022, property prices are once again on the rise.

To purchase the average first home, buyers will need to save approximately £24,279 for a 10 percent deposit. Many prospective buyers are compelled to save even more, as certain lenders maintain stringent affordability criteria for mortgages involving smaller deposits.

Obstacles in Home Buying

Last year, the average house price in England was 8.3 times the average salary, while in Wales, it stood at 6.1 times the average salary.

A recent survey conducted by the Building Societies Association (BSA) revealed that 63 percent of respondents identified mortgage payment affordability as a significant barrier to home buying. Moreover, 62 percent of the 2,016 participants indicated that accumulating a sufficient deposit posed a challenge.

Although mortgage rates have decreased following a reduction in the Bank of England’s base rate from 5.25 percent to 5 percent last month, they remain insufficient to compensate for the rising house prices.

For instance, purchasing an average property priced at £242,789 in July with a 10 percent deposit necessitated a loan of £218,510 at a 90 percent loan-to-value (LTV) ratio. A 25-year mortgage at 5.64 percent, which was the average rate at that time, would have resulted in monthly repayments of £1,360.

In contrast, had the purchase occurred in January when the average two-year fixed rate at 90 percent LTV was lower at 5.44 percent, the monthly payments would have been approximately £1,277. Buyers who acquired the average property in July 2022 would have enjoyed significantly lower payments of £1,101 on a loan of £215,607, based on an average two-year rate of 3.69 percent.

The burden of high mortgage repayments for first-time buyers has only been surpassed twice: shortly after the mini-budget chaos and again in August 2023 amidst persistent inflation concerns, following the impact of Russia’s invasion of Ukraine that triggered soaring energy prices.

While house prices have risen—averaging £223,562 for first-time buyer homes in December 2021—the prevailing low interest rates at that time facilitated more manageable mortgage payments. A mere 39 percent of respondents in a BSA poll from December 2021 cited mortgage repayments as a barrier to homeownership.

Those attempting to buy independently face unique difficulties. Savills indicates that 57 percent of first-time buyers received assistance from family members last year, an increase from 46 percent in 2022, marking the highest level of familial support since 2012. The agency estimates that 54 percent of first-time buyers this year will likewise depend on contributions from family.

Paul Broadhead from the BSA stated that the average deposit expected from first-time buyers is now around £60,000—160 percent higher than the £23,300 required in 2005, while wages have increased by significantly less over the same period.

“For those without familial support, the aspiration of homeownership may remain unfulfilled. Even with recent decreases in mortgage rates, the specter of a generation potentially stuck as lifetime renters looms large,” Broadhead remarked.

The most competitive mortgage rate available for first-time buyers at a 90 percent LTV is currently 4.49 percent, offered by Virgin Money, with the average rate at 5.53 percent. Across the entire market, the average mortgage rate sits at 4.81 percent.

To enhance their savings for a deposit, buyers might consider utilizing a Lifetime ISA, allowing for annual contributions of up to £4,000, supplemented by a 25 percent government bonus when the funds are employed towards a first home purchase.

Lenders are also providing tailored solutions. Yorkshire Building Society is set to offer 99 percent mortgages to select borrowers, contingent on meeting certain requirements, while Skipton Building Society presents mortgages up to £600,000 with zero deposit needed for clients demonstrating a history of 12 months of consistent rent payments.

Furthermore, Nationwide Building Society is expanding its Helping Hand mortgage initiative to enable first-time buyers to borrow up to six times their income (increased from 5.5 times) if they provide a 5 percent deposit, contingent on opting for a five or ten-year fixed mortgage deal.