Over the last few months we have seen doom and gloom everywhere, and Friday’s fall on the Dow Jones Index has further highlighted the perilous state of the US economy.  If the US were to dip into  slow down or even a recession this would effect all areas of the world, but should it stop you setting up your dream business?

While a best case scenario would always mean setting up a business when economies are growing and the good times are rolling, this cannot always be the case.  True, it may be a little more difficult to secure financing for a more adventurous business idea when the economy is under pressure, there will always be good money for a good business idea, no matter what state of the economy.  Imagine how strong you would be when the economy starts to pick up?

The internet has given more and more people a chance to follow their dreams, to set up that business they can run form home, and hopefully bring in a lucrative income stream.  The internet has also given many businesses the opportunity of exposure to other economies around the world, other than their own.  No matter how difficult the world situation is, there will always be pockets of vibrant economies, whether this be the fact there has been political change or perhaps they have joined the EU.  Not all economies will be down at the same time, and not all will be up at the same time.

However, in order to secure financing for your venture you will need to show that you have researched the market, you have the knowledge and focus.  Even if economies were in double digit growth mode, you would never secure any form of financing without a business plan - somethings never change!

In a move which is sure to have epercussions for world stock markets when they reopen on Monday, the Dow Jones was rocked on Friday, falling over 2% after a raft of downbeat announcements.  It  seems that the combined effect of announcements by Caterpillar and Bank of America have brought home the delayed impact which the recent credit crunch will have on the economy.  As we all know, if the US sneezes, the rest of the world catches a cold, so influential are their markets.

So what does this mean in the short term?

In what some may see as a healthy correction, you can expect a fall in world wide markets in the short term and it seems inevitable that interest rates in the UK and US may have to move lower to lessen the impact on economies. 

What happens if the economy slows?

A slowing economy can have a massive effect on employment, investment and the government budgets for public services.  The more people unemployed will reduce the tax intake, which will mean either additional borrowing by the treasury or less money for public services.  The economy is like a large ship which is very hard to steer, and takes a long time to change direction.

The authorities now have an excuse to reduce interest rates, and while there have been reductions overseas, the Bank of England have held steady and not taken any knee jerk decisions so far - which has been applauded by many, but criticised by others.  The next few months will be vital!

In a  move which will deeply embarrass the government, especially Gordon Brown and Alistair Darling, over 12,000 people have signed a Downing Street online petition to demand that the government repeal the recent capital gains tax changes announced in the budget.  Supposedly announced to hit the big money earners in the Private Equity Market, they have effected a vast number of the population and businesses.  Will the petition actually prompt a change?

While it will take a big shift in the position of the government to review the situation, opposition is growing to what now appears to have been a badly thought out plan.  All of the headline winning changes have disappeared, and the bare facts are that if anything the less wealthy of the country are actually worse off.

What next on the fight back agenda?

The next obvious target for attack is the recent rise in fuel duty, which has been magnified after the rise in the price of oil to over $90 a barrel.  Few people realises that the government actually earn a percentage of the price of petrol at the pumps, so a higher oil price hits business and the consumer, but is in effect a stealth tax against the rest of us.

There have been rumours of pickets at the various refineries around the UK, in a throwback to the events of just a couple of years ago, which brought the country to a stand still.  It seems that now more than ever the situation needs to be resolved, and the government will have a growing opposition for some time to come.

Can Gordon Brown afford yet another climb down?

As a direct result of further pressure in the middle east, brought about by the announcement that Turkey are looking to venture into northern Iraq to counter terrorist groups attacking their troops, the price of oil has risen sharply to over $90 a barrel.  While on the surface, with winter coming, this could not have come at a worse time, is this the real picture?

Surprisingly, many experts are privately suggesting that the recent rise in the price of oil is as a direct result of increased trading by speculators, and does not reflect the true supply and demand situation on the ground.  This case has been further strengthened by the fact that the gasoline market is still lagging the recent oil price rise, suggesting it may be the fault of speculators.

However, if the current oil price were to be sustained for some time it will have an impact on everyday costs, including power, transport and the like, not to mention even traditional food expenses (where increased transport expenses will need to be covered by the consumer).  It is in everyone’s interest to ensure that the middle east situation is kept under control, but attempts by countries such as Turkey to “protect” there own assets are becoming more likely.

We may be in a similar situation to last year, where we saw a massive increase in the price of gas, and it will be interesting to see how the authorities and the gas supply companies respond this time around, after so much criticism last year.  There is also talk of transport strikes with the implementation of Gordon Brown’s long delayed increase in fuel duty.

While the financial markets and many finical observers seem to think the credit crisis is over, the news from across the Atlantic seems to indicate that we may be seeing more bad news on the way.  Even though US interest rates were reduced dramatically to try and shore up the financial system, it seems that much of the bad news may only now be filtering through the hundreds of companies operating in that area.  So is the UK still at risk?

Unfortunately, while the UK stock market has been fairly steady of late, we have seen some concern over the last few days.  Wild swings on the US markets have filtered through to the UK and we are seeing significant daily movement in the markets.  It seems that just when most people thought the worst was over, there may actually be a second wave of bad news on the way.

The Northern Rock debacle is still continuing, and the blame game continues between the authorities and the companies operating in the sector.  While many companies are said to be hovering over Northern Rock it has been said that guarantees of some £26 billion would be required to complete a takeover - surely out of the reach of only the fool hardy?

The situation is far from over, even if many of the short term concerns have been alleviated, and we should all be on the lookout for the next wave of company results from the sector, which will not make good reading. 

This is a frightening question for many home owners, and one which you would never hope to have to answer, but some people may just be about to see the evidence over the next few months.  But how can your mortgage payments double, when rates have been fairly steady for a while now?

The problem for many UK mortgage holders will come when they see their low fixed interest rate period expire, with many of the so called cheap mortgage offers of the last 3 and 5 years coming to an end.  After the introductory rate has ended, mortgage holders will see their rates increase to current levels, which for many will be double the rate they have been used to for the last few years.  Imagine a doubling of your mortgage rate overnight, what can you do?

Unfortunately, for many customers their hands will be tied, because they cannot afford to remortgage at current rates which are as high as they have been for many years.  It will also be very difficult to change historic spending patterns to take in to account their future payments, so for many the choice may be stark - remortgage for a longer period, scrimp and save as much as possible, or downsize their homes.

Not the best of situations to be in, but many will have the insurance of a hefty rise in their property values over the last few years. 

As the internet continues to bring the latest news, views and offers straight to your door step, many people are now asking about the role of Independent Financial Advisers, and whether they are actually worth the money they charge. Surely it is time to “go it alone” and look after your own affairs online?

While those with substantial experience of the financial markets themselves may well be able to “cut out the middle man”, the financial markets are still very dangerous for those who do not fully understand them.  What level of pension are your after? What can you really afford? Should you use up the equity in your home? Which tax free investments should you consider?

For many people these questions may as well be written in a foreign language, as they may mean nothing - where do you start? Who do you blame if it all goes wrong? What protection do you have?

For those who are not up to date with the financial markets and the vast number of products on offer, it is still highly advisable to go through your own Independent Financial Adviser.  They do have the experience, they do have the knowledge and above all you are protected if they give you the wrong advice.  Cutting corners with regard to your future financial well being can be incredibly risky, and should be averted unless you know what you are talking about!

While the subject of the repayment of bank charges has gone quiet for some time, as we await the outcome of a test case later this year, HBOS are to be called to account later this week.  They have refused to fulfil earlier court orders instructing them to repay a total of £50,000 to 11 former customers.  A management company representing the 11 customers have applied for a wind-up order against HBOS for non-payment, but the bank have applied for an injunction.

Friday will see the bank forced to explain why they have ignored an earlier court order, and only paid back approximately £20,000 of the £50,000 awards.  The bank claim that they want the balance to be deferred until the test case later this year, but it is not clear what basis they have for doing this. 

This has further infuriated the millions of customers who are looking for repayment of their excessive charges, and in particular those who have received favourable rulings but not received the full settlement.  Quite how the courts will deal with these latest developments is unsure, but the banking industry are pulling out all of the stops to cut off the stream of repayments due to customers.

Even though Friday’s ruling will have no bearing upon the test case later in the year, it will interesting to see how the authorities react to the blatant disregard for earlier rulings.  Surely the banks will not be allowed to pick and choose which rulings they abide by?

While the government have long been on the trail of the mega rich Private Equity companies , the companies which are seen by many as asset strippers, will the recent capital gains tax changes have the desired effect? 

Prior to the recent budget, Private Equity investors were able to reduce their tax burden down to a minimum of 10% by holding their investments for a certain length of time.  This was supposed to be their reward for investing into companies which may have been in financial trouble, or required additional investment.  Then the authorities turned against them!

The government recently pushed through an across the board change to capital gains tax rules which set a flat rate of 18%, rather than the current 0% to 40% formulae, which depended upon what you bought, how you bought it and how long you kept it.  So now the 10% rate for the Private Equity companies has gone, but so have a raft of incentives for the traditional worker!

For years many companies such as Tesco have used SAYE (Save As You Earn) schemes to encourage their employees to invest (tax free) into shares in the company.  Under the old government rules they were allowed to take any profits free of tax if the shares were held for a certain length of time (often 3 years).  However, in their quest to attack the rich, the authorities have inadvertently brought the normal worker into play and taken away what little tax incentives there were for investing in SAYE and other similar schemes

The changes have also effected the small business person, where under the old rules they were allowed to taper their tax relief the longer an asset was held.  Under the new rules many will see their rate of tax increase from 10% to 18%, and these are not companies or business people earning millions of pounds!

Another day another rumour about the future of troubled bank, Northern Rock, only this time a new name seems to have entered the fray in the shape of Richard Branson’s Virgin Group.  While this is the latest in a long list of rumours, there does appear to be some substance behind the story.

It has been reported in a number of UK newspapers that Virgin are in talks with various US investors who would supply the finance for the group going forward, with Virgin looking after the day to day business of the bank.  While there is some confusion as to whether they would take overall control of the group, or just take a controlling stake, it seems that something is definitely going on behind the scenes.

As a number of observers have suggested, it looks as though the Northern Rock name may soon disappear, with the bank reverting to the Virgin Money brand if the deal happens.  In a short space of time this would remove the uncertainty about the future of the bank, as well as offering a much strong financial set-up.  The Virgin Money brand is also on the up, and while this would be a big move for the business, it is more than capable of taking on such a venture.

However, there has also been much speculation about other potential offers for the troubled bank, with US and other overseas parties being mentioned.  While the likelihood of a bid battle for the group is unlikely, bearing in mind the current situation, the likelihood of the group surviving in some shape or form seems to be improving with each day.