Cover of MoneyWeek magazine issue no 786, Friday 25 March 2016

Osborne's grand plan for your savings

22 March 2016 / Issue 786

Pensions are changing – for the better in the long term. But in the short term, we’ve got a complicated mess. Charlie Corbett looks at the best ways to squirrel away your cash. Read this week's cover story here.

• The Fed’s dangerous decision to ignore inflation
• Will the sugar tax make us any healthier?
• Hulk Hogan wins $140m court battle

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Merryn Somerset WebbEDITOR'S LETTER

Merryn Somerset Webb

What Stalin, the Stuarts and Lidl lobsters can tell us about the EU

What does the EU have in common with the Soviet Union? What does it have in common with the governments run by England’s early Stuarts? What makes it look a bit like pre-revolutionary France? And why should the price of Lidl lobster (£4.99) tell us anything about how it works? The answers are all in this week’s magazine.

This week, I talk to Bernard Connolly, a man who knows more about the EU than perhaps anyone should. For him the EU is an empire-building bureaucracy that takes freedom and sovereignty from its nation states and offers little but crony capitalism in return.

What real difference, he asks, is there between the way the EU caves into lobbyists and the way the Stuarts sold monopolies to keep state finances afloat? Matthew Lynn picks up the theme later. The Swedes are demanding that we stop importing cheap US lobsters. The EU might well agree (on some spurious basis or other). The result will be more “back-door protectionism”.

On to pre-revolutionary France. You can also read Edward Chancellor’s story of John Law’s destruction of the finances of the French state in the 1700s. Law’s scheme was to create a bank; print money; use it to drive up the price of assets. Sound familiar? The European Central Bank (ECB) is well down the path of doing the same – and taking it to the same extreme. When Law felt his policies weren’t working, he banned bullion. The ECB is talking about banning cash. That, Chancellor tells me, is “as despotic as anything John Law ever attempted”. This kind of thing never ends well: to France it brought the guillotine.

How do you invest in this environment? Calmly, carefully – and, says Connolly, not too enthusiastically. He sees little way out of the current crisis, which suggests we’ll lose much of our wealth one way or another (see page 6 for all the evidence that inflation is picking up). May as well “eat, drink and be merry” with some of your cash before that happens. The rest, keep in bonds and gold.

If you don’t share Connolly’s outlook (you crazy optimist!), David Stevenson suggests a small portfolio of investment trusts for the long term. I’m taking this as something of a challenge: will his beat mine (new readers can find it here)? Let’s hope not. I don’t want to have to ban it.

Finally, whatever you invest in, make sure you do it in the right tax wrapper – for help on that, see our cover story.