The IBSA Podcasts
IBSA podcasts contain information from a global community of entrepreneurs and professional advisors dealing with international business structuring and regulatory compliance.
Hosted by Roy Saunders, who has over 50 years’ experience within the financial sector, these podcasts delve into enlightening conversations with a wide range of leading professionals aiming to demystify the complex world of business and provide invaluable insights to help listeners deal with various complex technical matters to best support their business and clients.
Disclaimer: We believe the information in this podcast to be correct at the time of recording. The information given is relevant at the time in line with governmental legislations. Competent counsel in the jurisdiction(s) whose laws are involved should be consulted. The podcast is made available by the IBSA for educational purposes only and to provide general information. The information should not be used or relied upon as a substitute for competent legal advice from a licensed professional in your jurisdiction.
The IBSA Podcasts
Ross Belhomme Explores Economic Tactics for an Uncertain Future
Brace yourself for a fiscal odyssey through the UK's taxation labyrinth, with Ross Belhomme, illuminating the twists and turns of inheritance tax reforms and corporate economic maneuvering. As we dissect the financial markets' resilience amidst trade tiffs and inflating interest rates, we'll guide you through the investment minefield of geopolitical volatility. We're spotlighting investment darlings—commodities, Bitcoin, ETFs—and sizing up the budding allure of Saudi Arabia as it flirts with tourism and foreign dollars. It's a treasure map for the savvy investor in a landscape where defensive plays are king and emerging markets are a game of high-stakes poker. Stay tuned, as these critical insights and more will be revisited at the IBSA annual conference, a not-to-be-missed junction of financial minds.
Join us as we peer into the cauldron of geopolitical strife—North Korea, Taiwan, the Middle East—unpacking the complex machinations of nations bracing for conflict. But it's not just about the politics; your wallet is on the front lines too. We discuss how trade disputes and a voracious appetite for commodities could tighten the inflationary screws, making household budgeting an exercise in strategic foresight. Meanwhile, the US dollar's hegemony as the world's reserve currency hangs in the balance, prompting a hard look at safeguarding assets and investment acumen in a world that feels one twitch away from chaos.
Hello and welcome to this IBSA podcast on the likely economic, political and tax events that we're likely to have in 2024. My name is Roy Saunders, founder and chairman of the IBSA, the International Business Structuring Association, which is a multidisciplinary global association of entrepreneurs and their professional advisors, dedicated to sharing their expertise with each other within a great networking platform. Today, I'm joined by Ross Bellom of Bellom Law in Zurich. Ross is a tax and trust specialist who has his own practice involved in investment advice, fund administration and family business structuring, and he'll be sharing with me his views on what's likely to happen this year after a fairly stormy January. So, ross, let's start with the main concern for everyone, and that's geopolitical issues, really, basically the wars, the trade disputes and the inflationary pressures that these may bring. What are your thoughts on this?
Speaker 2:If you're looking at the really, really big picture, I see this in sort of two ways. One is, I mean it seems that World War III is unfortunately going hot. I mean, looking at everything that's really happened since 9-11, I would say it does look like we were in World War III without really knowing it, and certain factions of different parties of different countries around the world seem like they want to get this fight over and done with. It's a bit like a bar fight, I think. I mean everybody's been getting drunk and drunk and the bar wanting to have a fight, and we're just waiting now for somebody to chuck a chair across the room and for it to kick off. And I really think that's where it is. I think even people like the Iranians have really had enough and want to take the gloves off.
Speaker 2:And unfortunately, I think we do see, perhaps over the next five years, potentially a very hot war in places like North Korea, taiwan, the Middle East and maybe even Western countries. I mean it was over the last two weeks. We've seen army generals in places like Holland, britain and Sweden preparing in the population for war, and that's very worrying. So I think that's a reality for people at assets that we need to think about what we need to do. We need to be ahead of these things and think strategically. It's a fact of life, these things.
Speaker 2:There's always been war between humans. And then I think the second point is what? I think it's the sort of green revolution, the climate activism. While it can be debated whether the lens that that is actually having effects on the planet, one thing that is certainly appearing is that certain portions of society are now getting quite penalized by these policies, with taxes going up or subsidies being withdrawn. We've seen that the farmers striking in France and Germany, and so I think those two are really very big geopolitical plays that are having a big effect. You know, as we can see in Germany, a once fairly stable country now has energy problems and its economy is de-industrializing and falling into tatters.
Speaker 1:So that's my two points. Well, that instability that you're talking about is not good, obviously, from an financial point of view, from inflation I mean. We've been seeing a downward trend in inflation, a small spike in December, I think it was, but I mean basically downward trend. With these disputes and what's likely to happen, what do you think is going to be the effect on the inflation and and you know, consequent to that, on on interest rates and all the things that go along with that?
Speaker 2:Yeah, I mean I was sat with a mining chap the other day having a coffee and this is a geology as a science scientist in the mine industry and he was outlining the sort of demand for raw materials for commodities is so high. I mean, even in the next five years the demand is going to be more than the demand has ever been in human history and there just isn't the mines or the resources to satisfy that. So that is going to have a huge inflationary effect and it's going to hit the normal average person on the street the hardest.
Speaker 1:Well, it means, if we have inflation continuing at high rates, interest rates are going to continue at high rates, which puts more pressure on the household finances. So that is quite difficult to to envisage. As far as currencies are concerned, you know the, the dollar, is the stable currency of the world. Do you think that that is going to be maintained? I mean, obviously, the Chinese one could be quite strong at some stage, but at the moment I think we've got 88% of world trade is in dollars, so do you think that's going to change with all of these disputes, or because that provides a bit of stability as well? Yes, it's really interesting, that isn't it?
Speaker 2:Because, I mean, effectively, the US is well bankrupt, isn't it? It's fair to say. But everybody still wants to buy US treasuries and I think the view on that is that, yeah, there's always a massive amount of money, there's always a massive demand for dollars, because most things are priced in dollars and therefore they can print as much money as they want and there will be demand for it. So now, what about these, these other currencies that are appearing or the sort of initiatives on the bricks, and they're not going to play out this year, are they? They're not going to probably play out in the next three years, but they might play out over 20 years, so it's probably something not to worry about in the short term.
Speaker 2:The US dollar being replaced I know people talk about the Bitcoin replacing the dollar, but maybe in 40, 50 years time. But yeah, in the short term, it's hard to see the dollar being replaced. But, of course, all fake currencies come to an end, or all the all fake currencies have lost value and they always have over history, so these currencies at some point will disappear. They always do so. When you feel thinking very long term, what do you place your assets in? What's your view on that?
Speaker 1:Well, as you've almost said, really commodities are the things that one perhaps should invest in, and back to 1931 and the gold standard, you know it's, this has always been the case really. But I mean the US dollar is. It does provide certain degree of stability, I guess. But of course we've got the political issues coming along this year, both in the US and the UK and elsewhere as well, and we've seen how many countries are going to the right, quite significantly. The UK may well go to the left with the Labour Party, or at least the centre. What's your views on the Trump getting in? Do you think that's likely and what do you think the consequence of that will be?
Speaker 2:Particularly on the geopolitical issues that we've mentioned earlier, yeah, well, I mean, I heard one comment to say it's a sort of a race to see who goes to jail first. You know, is it Biden that's going to get locked up or Trump? Really, Maybe that's what they've been fighting about, Because, you know, while they've been trying to tear into Trump, Trump's been revealing a lot of things that certain people didn't want to be revealed. It's looking like he is going to get elected but Bard being jailed, or something worse. I still don't understand why the Democrats haven't switched Biden out for somebody.
Speaker 1:No, that is amazing. But I think yeah, what I have heard is that and I believe this is probably true Trump is so unpredictable that this could actually assuage the development of warring factions around the world who say you know they want to do this, they want to do that, but you know they are afraid of the reaction from Trump and to some extent that could provide a little bit of stability, which is so badly needed. So that's going to be an interesting one with Trump.
Speaker 2:Yeah, I think he will probably reign in the new cons a bit and he does pay lip service to certain factions but then doesn't actually quite do what they said that they would do. I think he didn't start any wars in his first term. So, yes, I mean, I think on, perhaps on the international stage, perhaps from a World War three perspective, trump presidency might actually be good. But I think, if he gets in, is it a civil war in America?
Speaker 1:Yeah, so, yeah yes, that may well be. They're so divided. They're more divided than we are here in the UK. What do you think about the tax consequences of having a Labour government?
Speaker 2:Yeah, well, of course everybody's always worried of a Labour government coming in, that we will have things like what inheritance tax increased or wealth taxes or the non-dom regime being withdrawn, and there's been a lot of debate about that. But I mean, it seems to me I don't know, obviously you're in the UK, you'll be close to this but it seems to me that Labour Party now is pretty much the same side of the coin as the Conservative Party.
Speaker 1:To some extent, that's true.
Speaker 2:They are very centered, yeah, but yeah, I mean, I think a lot of people are generally expecting that that non-dom regime has probably come into an end. I mean, it's been getting watered down for years, hasn't it? So you know, I think if you're an ultra high net worth sat in London right now, I mean it's inconceivable that the toys won't get wiped out in May, when it was in November. Now I think they're talking about the election, aren't they?
Speaker 2:Yeah, I mean, I think when Rishi appointed David Cameron as Foreign Secretary, that was a final nail in the coffin, a bit, wasn't it? And just need to bring Tony Blair back, and then that that would be, that would be complete. But taxes are only going to get worse in the UK, aren't they?
Speaker 1:I think they're 37% of GDP. It's the highest level it's ever been. I mean the UK. The Conservatives in March are likely to. They might even abolish inheritance tax, because that has actually been mooted in the papers. And when things are mooted in the papers, it's often to try and suss out how the public feel about this and before they actually finalise their plans they said all that at the World Economic Forum.
Speaker 2:They didn't know that. My view was they were just sort of playing to that audience a bit. But I guess we'll see.
Speaker 1:I think they might do something with it, like reduce it, because it is an iniquitous tax when you know you've already been taxed on the income and gains which create your wealth, and then your tax the gain on death. It is almost the double taxation chart really.
Speaker 2:I was doing a piece of a client recently who's about to have an exit in the UK and they're at their UK Resdom. But they just asked as an intellectual exercise, is there anything I can do? And I mean, my team spent hours on this and it was just amazing to see how every clever idea you think of has already been thought of by the Legislature and HMRC. The UK's are very well clamped down tax country, Although I always say for people that are just using the sort of corporate system, it's actually very good, but not so good if you're actually tax resident there.
Speaker 1:Yeah, no, that's true. Well, I mean talking about the forecasting financial markets have already taken into account, I think, all of the things that you and I have just been talking about. I mean, they're very astute people in the financial markets and they've, you know, by the time you've woken up to it, really, they've already thought about it and the markets have changed as a result. Equities have done quite well. There should be, I guess and this is more your field a correction perhaps, but bonds seem to have held up very well and if what you're talking about with the trade disputes the consequence on inflation interest rates therefore remaining fairly high still, because they don't want to come down too quickly in case inflation reduction doesn't happen, and you know, all of that means that bonds is probably quite a good investment. But what do you think? Do you think we are going to get global growth over this year? Do you agree with the way that the markets have still retained their value?
Speaker 2:Yeah, I mean, people have, ever since the financial crisis in 2008, have been every year saying that the markets in a crash, their stocks are overpriced. It's almost a bit like the old fundamentals that people used to rely on have changed, I think, a lot of the way the world used to be looked at it operates a lot differently now. So I'm not expecting any sort of crashes this year. I would say I think we still got another year warming up. You know, I think, unless, as we said, the geopolitical events go quite hot, even if they are priced in. I mean, certainly, things like the crypto markets are all expecting to really pump up this year. They normally sort of lead the stock market actually historically, and, of course, the printing of money is going on, isn't it? So that's continuing, which is perhaps the main thing that's been pumping up the market. So I'm not expecting crashes this year.
Speaker 2:I think people always ask you what's the smart money doing? And I can tell you the smart money is doing exactly what you're all saying. It's buying commodities. It's buying Bitcoin as a digital commodity. It's buying silver. It's buying other oil, etfs, things like that. If you're a trustee or something you know, you probably just want to sit in a very conservative balance portfolio. Don't you Just try and take the edge off the inflation? I probably wouldn't want to be invested too aggressively, but I think the quantity play seems what most smart people are doing in a very volatile geopolitical world at the moment.
Speaker 1:That's very interesting. What about under developing markets, the BRICS and the other places? In the last few years we've seen quite a lot of money going into there, but it seems to me as though people are being a little bit more cautious about putting money into developing nations there.
Speaker 2:Yeah, I guess a lot of investments in Russia are probably going to be nationalised, aren't they? Especially if the US does take that 300 billion that they've frozen. I mean, that's another point to make here is one of the things that's really happened over the last couple of years is the weaponisation of the financial system. I mean, we've seen that with the very aggressive sanctions and freezing of assets, but we've also seen individual sanctions. I've seen trustees and directs of companies sanctioned. Correspondent banks these days are very aggressive Quite often that they will block transactions.
Speaker 2:So yeah, there's always the temptation to try and put your money somewhere more remote. But is that a good idea, especially when there's a sort of ticked attack maybe going on between countries? If you phrase my money over here, we'll take your restaurant over here. Saudi Arabia is quite an interesting one, isn't it? I don't know a lot to hear your thoughts on that. That's one that is perhaps a bit of a game changer, isn't it? Completely opening up? Even advertising for tourism now I remember back in the day you had to get an invitation from an actual Saudi before you could even think about flying there. But that seems to be completely opening up. So I know a lot of people got their eye on Saudi, particularly with this perhaps commodity safety zone that we've been talking about.
Speaker 1:The markets do seem to favor defensive arrangements with their portfolios, defensive being, yes, commodity-led bonds, equities, to a certain extent. I think Saudi Arabia is an interesting place. Obviously, at the moment, with the Israeli Hamas War, there's not going to be the development of Saudi. You know they were almost on a level playing field with getting an arrangement with Israel, which would have been very, very good, I think, for the Middle East generally. And then Hamas came in. So, as you say, there have always been wars. So I agree with your sentiments. I think it's an interesting thing.
Speaker 1:We've covered a lot of topics there and we'll see how things go, but I think the defensive position that most financial gurus are taking seem to be the obvious one at the moment. Well, thank you, ross, for joining me today. That was really interesting and I'm sure all of our listeners are extremely grateful for these insights that you've given us. We're going to be discussing some of these again on the 23rd of May at the IBSA annual conference in London. Details are on our website at the IBSAorg. So let me conclude this podcast by thanking you very much indeed and thanking all of our listeners for listening to us.