Foreign Perspectives

Archive for the ‘Finance’ Category

Although they can be annoying, it does seem to be a good sign that the people trying to sell you credit cards are back in the shopping centres again and those annoying teatime calls trying to do the same have restarted too.

I imagine that there are all kinds of grand things that the economists are saying these days about when we should be starting to get out of this recession but I think the banks trying to push more credit onto us must be amongst the clearest and most easily understood sign of them all. Not only does that show that the banks have money to lend once more but it also shows that they’re at least prepared to consider lending it too. You might think I said the same thing twice in the last sentence but I didn’t. They always did have money to lend, what they wouldn’t do was actually lend it.

Moreover, this isn’t like them lending via mortgages (which also seems to have restarted, going by the number of “sold” signs going up lately). With a mortgage they have some security (ie they can take the house off you). With a credit card, they are taking a real risk that they could lose the money so overall it’s more encouraging to see people trying to sell you credit cards than it is to see more mortgages being approved.

Now, I’ll grant you that they are probably going to offer you a lower limit than you might have expected in the past, if they offer you a card at all that is. However, that they are trying to actively sell credit cards now seems a very clear sign that an upturn is on the way.

The first time I came across ELQ (Equivalent and Lower Qualifications) was a year or two back when it was mentioned in one of the rare rallying cry type emails that come out from the Open University. What’s it all about? Well, basically the government are intending to drastically reduce funding to universities for those students who are studying for a qualification that is equal to or lower than one that they’ve already got. For example, if you already have a BA or BSc degree then if you sign up for another BA or BSc degree, even if it’s in a totally different subject, then you come under the ELQ rule.

In practical terms, the number of ELQ students is fairly low in most mainstream universities but it’s quite a different matter for the OU where many people start on a different degree for leisure purposes (the proportion of retired students is pretty high on some courses), to change career or to acquire a degree in a more relevant subject to their existing job. Thus, something that would largely have affected the night classes run by mainstream universities is going to affect the main business of the OU. Ironically it would appear that an excellent institution created by the Labour party way back in 1969 may well be killed off by the Labour party of 2009.

So how significant is this reduction in funding? Well, that’s the problem: nobody really knows for sure. Yes, there’s a figure for the reduction but the snag is that the reduction in funding is being met by an increase in course fees and nobody knows what impact that will have on the uptake of courses by students.

Plucking some figures out of the air might give some idea of the impact though. At the moment the OU charges around £10 per point degree courses thus overall a 360 point honours degree costs about £3,600 or around £600 a year on average spread over the typical six years of their courses. Depending on the subject that you do residential schools may increase that to more like £4,600 so say £800/year on average.

However, were the university to double those fees which some would say seems likely, what would happen? Would people find it so easy to justify £1,600 a year over six years? The snag is that it’s not quite so simple as that because there are a lot of quite major universities around the world offering distance learning in similar ranges of courses. Whilst an overall cost for a degree of under £5,000 is quite a bargain generally, that’s not the case were the overall cost to be twice that.

Already discussions are ongoing in the university as to what to do. For example, the science faculty seems likely to drop all but one of its named degrees and is looking for ways to drastically cut the cost of running the residential schools. Whereas right now you can do degrees in physics, chemistry, biology, geology, life sciences and natural sciences in the future there might only be the option to do just “science” albeit with at least some of the currently existing degree programmes continuing to exist as strands within that. Although as they say most of those named degrees were only introduced in 2003 taking them out just six years later seems rather a rapid move on the part of the OU. I’m quite sure that I’m not the only one of their students who ruminated over doing a degree with them for a number of years before actually getting around to it.

Now whilst they argue that they need to drop the residential courses because they don’t make any money on them, they’re in this situation largely because they separated out the residential courses from the courses to which they were originally linked. For example, S103 included a residential whereas S104, its replacement, has SXR103 as a separate residential course. Thanks to the way that most companies sponsoring students on courses work the non-compulsory nature of SXR103 means that fewer people will get funding to go on it.

That’s just the science faculty too. Other faculties attract more hobby students and could see substantial number of courses needing to be dropped if the prices go up too much. For example, how would the various history courses fare at double their current cost? Yes, many of them sound fascinating (and are on my own short list) but realistically I’d have thought that they’re more likely to be done by the retired hobby student population (who tend to get much better marks than the rest of us) and so could be more price sensitive than other more employment oriented courses.

Supposedly none of this affects us students registered for the courses with addresses in Northern Ireland. Not yet, anyway. I imagine that it’s none too ethical but presumably the OU could just supply all students with an NI forwarding address and thus continue to claim the full funding. I wonder if anyone’s floated that suggestion yet?

One of the big surprises in many ways is just how fast formerly eastern block countries are moving into the first world.

For example, not so many years ago the thought of a  luxury golf property in Bulgaria would have been laughed at. No longer though for the likes of Tharacian Cliffs, starting from scratch, seems likely to become one of the top golf courses in the world according to Gary Player.

The reason is simple of course: they’re able to start from a blank sheet and have lots of cheap land and labour to construct the courses. For the rest of us there are increasing numbers of cheap flights available to get us to the area.

Overall, a win-win situation for everyone apparently.

Since the insurance needs of companies tend to be more sophisticated than those of individuals you generally don’t find the equivalent of online price comparison sites in the company insurance market that you expect in the personal insurance market.

So to get corporate insurance you will almost always need to go to a specialist insurance broker which obviously means looking at firms relatively close by your business premises.

However, it’s worse than that in that, for example, to shop insurance Glasgow, if you’re in a relatively specialised market niche you’d need to look for, say, insurance for contractors Glasgow. Well, “worse” in the sense that you may need to be more specific in your requirements of an insurance broker but if that broker is more familiar in dealing with your type of business you’ll generally save a lot of hassle in explaining what you do and won’t miss out on essential insurance that’s specific to your industry group. Not only that but the specialists will know more about the types of policy available to your industry niche too which can save quite substantial amounts of money.

Incidently, don’t be tempted to try to do the cheapo route of just using one of the personal insurance comparison sites as they usually don’t list essential items of business insurance and you could find yourself with an expensive problem should it turn out that you don’t have some legally required insurance or there’s an exemption in the insurance that you bought which means that you’re not covered for doing something that you do quite regularly. These things usually only become apparent after you need to claim on a policy which is obviously a little late in the day.

Although not too many people are doing it at the moment, this is probably one of the best times to consider buying an overseas property as prices are generally rather more depressed than they normally would be. Having said that there are lots more people selling or at least trying to these days which in itself brings up similar issues.

For a start there’s the different legal system to consider. Even if you’re European and buying or selling in another European country you can still find that, although illegal, the local authorities will retain some of the proceeds of a sale in case it turns out that you owe them any taxes. It’s worth pointing out to the legal person dealing with your sale that they are legally required to treat you as though you were a national of the country and that applied even if you fully intend to take the proceeds abroad afterwards so long as it’s to another European country.

Obviously with a property investment you can be talking in terms of quite substantial amounts of money and if you’re going to be changing currencies then it’s worthwhile looking into your options to reduce the costs of exchanging the money to the other currency and also of reducing the risk to you of there being a substantial move in the exchange rate. For example, this year the pound/euro rate has moved from around 1.10 to around 1.20. Ten cents doesn’t sound like much but if you’re looking at a typical property of around the EUR 300,000 mark that’s EUR 30,000 of a difference which is enough to cover legal fees with change or think of it as the swimming pool that you quite fancied.

How do you reduce these charges and risk? If you go to your bank as most people do you are likely to be hit with the maximum charge possible although the charge can be even higher if you just use the local legal people to send you the proceeds as they’ll add charges on top of that. The best way is to go to one of the specialist money brokers who can shave 5% or more off the charges that the banks apply and can also arrange to fix the rate you’ll get months in advance which eliminates the uncertainty in the amount that you will ultimately receive. Aside from the charges from the rate fix, there are no downsides as if the exchange rate moves in your favour you can let the fix lapse and exchange the money at the current rate.

On non-financial matters don’t neglect the time delays inherent in overseas moves generally. Not only does the money take longer to arrive (unless you just take it as a suitcase full of cash which is quite legal though may raise a few eyebrows), but it’s obviously going to take longer for the removal truck to move your stuff from A to B. There aren’t any formalities required in moving your own stuff around Europe although expect checks for illegal immigrants at the ports and be sure that the lorry doors are secured with a padlock (most aren’t) to avoid a few questions along the lines of the “have you packed the case yourself” familiar to air travellers.

It’s best to plan the move more carefully than you would for a normal domestic move as you’ll appreciate from the above that there are a lot more places that complications can arise.