Reflecting on the last 20 years in the world of finance

1999 and 2019 – different worlds?

In 1999, The Outsourced Marketing Department was established to offer outsourced marketing support to SMEs. Fast forward 20 years, and we are a full service marketing agency offering a wide range of solutions to 1,500 firms in the professional services sector. Perhaps naturally, we’ve been feeling quite nostalgic this year and have spent a lot of time reflecting on how different the world is from when we first started out two decades ago.

Now, you may or may not remember 1999, a time when almost everyone was looking forward to a global celebration to usher in the year 2000. There was some apprehension, too, over the prospect of computers being hit by the so-called Millennium Bug but, after action to ensure ‘Y2K compliance’, all was well in the end.

3,100 lire to the pound

What else was happening in 1999? Well, Europe’s new currency, the euro, made its debut on 1 January that year, but only as an accounting currency in 11 countries; tourists would still get roughly 3,100 Italian lire to the pound until euro notes and coins appeared in January 2002. The UK had decided not to adopt the euro, after quitting the Exchange Rate Mechanism in 1992.

It was in 1999 that the Individual Savings Account arrived on the scene, though the concept of tax breaks on personal savings and investments wasn’t entirely new. When Chancellor Gordon Brown launched ISAs in April that year, they replaced tax-exempt special savings accounts and personal equity plans, TESSAs and PEPs. Junior, Help to Buy and Lifetime ISAs were added later.

Since 1999, we’ve seen many changes in interest rates. They headed rapidly downwards after the 2008 financial crisis. In early January 1999, Bank of England base rate stood at 6.25%; it’s now 0.75%, having been as low as 0.25% in recent years. With CPI inflation only about 1.5% during 1999 and base rate between 5.5% and 6.25%, it was a good year for the pioneering ISA investors.

House prices treble

Since 1999, inflation hasn’t been kind to first-time home-buyers. According to Nationwide Building Society figures, the average UK house price ended 1998 at £66,313 and rose more than 12% to £74,638 by the end of 1999; the Q3 2019 figure was £216,805. On the other hand, Bank of England statistics show that SVR, tracker and two-year fixed mortgage rates have shrunk since 1999.

As for stock market investments, the FTSE 100 was on a roll during 1999, hitting 6,930 on 30 December, but slumping in 2003 after the dotcom bubble and again in 2008. Having clawed back up, the FTSE 100 stood at about 7,300 in mid-November 2019. Equities did better in the US, where the Dow Jones Industrial Average closed at 11,497 in 1999; it has ventured above 27,800 this November.

The past 20 years have been a game of two halves – one before and the other after the global financial crisis. That’s been reflected in the value of the ‘safe haven’ precious metal, gold. Figures from gold.co.uk show a price around £172 a troy ounce in December 1999, rising to £687 in December 2009 and £1,138 recently, after peaking around £1,278 last September.

Tech changes everything

The biggest change of all must be the impact of technology. Mobile phone and internet services had started to develop before 1999, when about 26% of UK households had a basic mobile phone and at least 20% had dial-up internet access. Capabilities have since been transformed and combined take-up is at 95%+. In just 20 years, technology has changed the face of communications, shopping, marketing, financial services and just about every aspect of daily life.