This is not an easy environment to invest in

The global economy gives. The global economy takes away. Make sure your portfolio is set up to deal with it all.


You may not agree with them, but they're good news for politics
(Image credit: 2019 Getty Images)

The global economy gives. The global economy takes away. So Germany is finding its economy is stuttering as demand for its exports falls (manufacturing orders from foreign countries were down over 9% year-on-year in December). And so the UK is finding. Most commentators have been quick to at least partially blame Brexit for the miserable news about Honda. But it's a tough position to defend.

If this was all about Brexit, Honda might have wanted to wait a mere six weeks to see what Brexit is actually going to mean. It might also not have announced the closure of its Turkish plant at the same time. And it might even have hinted that it would open a plant in a country rather more enthusiastically settled in the European Union's customs union than we are.

The truth is that the global car market is changing (sales are falling, diesel is finally all but dead, one reason for the surging price of palladium) and the role of the UK is changing with it. That's not to say that uncertainty over Brexit isn't having an effect on investment in the UK economy (albeit an unquantifiable one), it's just to say that for now at least global shifts are probably having more of an effect.

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On the plus side, while the UK looks like it will be losing jobs in the car-manufacturing sector overall, it is doing a pretty good job of creating them elsewhere. The unemployment rate is now a mere 4% the lowest reading since the mid-1970s. Even better, this tightening of the labour market is finally feeding through into real wage rises with wages rising at a nominal annual rate of 3.4% and inflation sitting at around 2%, workers' pay packets are at last growing faster than the cost of living.

There's good news too in UK politics. As Matthew Lynn points out, it is long past time for a Parliamentary shake up. We have too many taboos and spend far too much time dodging talking about them (think the NHS, the state of our infrastructure and our universities, tax credits, the way national insurance isn't really insurance, and so on).

The new Independent Group mighthave been prompted by Brexit (beingagainst it appears to be the only thing its members have in common), but once that path is set perhaps they will morph into a force for real change or at the very least prompt a long overdue conversation about real change. Here's hoping.

A world of iffy GDP growth, mostly high-ish valuations and rising inflation risk (those wages rises are not confined to the UK), does not create an easy environment in which to invest. With that in mind, we emphasise the value of diversification, and then in our cover story we look at the value of forestry as a real asset diversifier for the long term.

David Stevenson looks at two interesting income funds thatcan help you build inflation protectioninto your portfolio, and Matthew Partridge looks at why you shouldn't shun housebuilders just because house prices are falling (nothing is ever that simple!).

Finally, if you really want to take diversification to an extreme, it turns out that superhero comics can help.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.