Volatility – A Millennial’s Consistent Bedfellow

Tommy Lydon

Sales Director
Tuesday, Feb, 28, 2023
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Take a look around your workplace (virtual or otherwise) and you might notice that demographics are changing. 

The continuation of hybrid working, the increasing percentage of the female working population (recently updated to 72.3%, only slightly down from the all-time peak of 72.7% in 2020*) and the great resignation have all been seismic in terms of upending the look and feel of the current UK workforce. 

A combination of the above events, immigration flows and the relentless march of time has ensured that I, along with my fellow millennials, now make up the majority of the UK workforce and what a battle-hardened generation we have had to become!

Regularly pilloried as more interested in what milk substitute is flavour of the month whilst drifting from one avocado laden brunch to another, the reality is that millennials have entered their adulthood and working lives navigating a series of once in a century events compressed into just over a decade. I’ve picked out 4 personal reflections on these epochal events below but would welcome any suggestions for any I’ve missed from readers in the comments on my LinkedIn post, here:

1. Global financial crisis: 

I was a bright eyed 18 year old in September 2008 when Lehman Brothers collapsed precipitating subsequent bail-outs across the western world. Unfortunately for policy makers it would be another 3 years before I completed my Economics degree.

2. Financial scandal/mismanagement:

Over 3 years later, armed with a spot on a banking graduate scheme, the sector was left reeling from the June 2012 LIBOR rigging scandal. Was it all about to end before it had even begun? 

3. Brexit: 

Jump forward a couple of years where my friends and I ensured that we booked our return trip from the 2016 European Championship to get home in time for Thursday 23rd June to complete our civic duty by voting in the Brexit referendum. Roy Hodgson’s team followed us home shortly afterwards but at least the FA got their act together in the years following an embarrassing European exit…

4. COVID-19: 

March 2020 and I found myself in Italy, looking at wedding venues and reading about hospitals in the north collapsing under the pressure of this new virus, COVID-19. It seems naive or even perverse to think that I was looking forward to an enforced period of working from home when I got back.

 

A decade of low growth, bookended by a global financial crash and a global pandemic had been tough for us all but I seem to recall there was a point towards the back-end of 2021 where green shoots of recovery could be seen. The ingenuity and sheer brilliance of the scientists behind the vaccine programme, coupled together with what felt like a truly global, shared common purpose may have been the start of a new period that would usher in a roaring 20’s for the 21st century. Millennials rejoice, our time had come, this was our swinging 60’s, our Big Bang moment…

Devastatingly, Vladimir Putin’s attack on Ukraine ensured that we exited the pandemic to an onset of further needless death, desolation and extended volatility.

A new roaring 20’s flirted with us but what we ended up with was the stagflation of the 70’s – high inflation, low growth and high interest rates – “Interest rates, what are they?” 

Throughout the volatility of the last decade or so one thing that was pretty consistent was record low interest rates. Not that many millennials will have noticed, that housing ladder remains sadly out of reach for many, so paying off a mortgage through the 2010’s was as unlikely as logging into your forgotten Bebo account.  

Mortgage or not, everyone will have noticed that prices are on the rise, the most recent inflation print was 10.05%, 5 times the MPC’s target level. Interest rates remain the primary lever to manage inflation so as inflation persists, higher interest rates have been employed and they are here to stay. 

With higher interest rates likely to be persistent, will our economy’s fundamentals change in the next decade or have we simply returned to a ‘normality’ that the majority of the working population has never experienced? For instance, the interest rate in the UK averaged 7.12% from 1971 until 2023 so we’re still trending below.

Unfortunately, the author is not a soothsayer when it comes to the economy, but it certainly feels like volatility is and always will be a consistent bedfellow as we navigate the future. Luckily, for my fellow Millennials, and colleagues from other generations managing excess cash within their business; whether they are Baby Boomers, Gen X or Gen Z, there is a solution for both the volatility and a higher interest rate environment, via the TreasurySpring platform.

Access to 18 of the world’s 20 safest Banks, supranational sub-sovereign agencies, direct government exposure and the reverse repo market via a single sign-on helps improve counterparty exposure and reduce risk in a volatile environment. Alongside this, our ability to support institutional liability raising on a significant scale means that we can leverage higher rates to pass on to our clients. 

Whatever the future may hold, our existing and future clients can be confident that in TreasurySpring they have a team that has learned from the past and knows there’s a better way.

If you’re looking for some fresh thinking about how best to manage cash, now or in the future we would be delighted to hear from you. 

We also appreciate any brunch recommendations; some biases are true after all.

 

*Office for National Statistics Female employment rate (aged 16 to 64, seasonally adjusted): %

 

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