- High earners and big businesses bear the brunt of initial tax changes
- Furlough scheme, stamp duty relief and business rates support to continue for much of 2021
- Commitment to green growth
By September, when the furlough scheme ends and the last drops of Rishi Sunak’s Covid-19 support scheme come to a close, the UK economy will have enjoyed 19 months of government aid.
And in that time, the chancellor has proven himself to be a likeable and capable politician - willing to dish out loans and grants and cash to almost everyone in need. Only a few small business owners have slipped through the net of support.
But winning the hearts of a nation isn’t difficult when you have almost endless pockets of cash. From today, the narrative from the Treasury has started to turn. The slogan is no longer ‘whatever it takes’, but the altogether more sensible and far less catchy ‘fixing the nation’s finances’.
That’s hardly surprising. Covid-19 support packages have come at a total cost of £352bn and when you add in the fiscal support from the Treasury, that rises to £407bn. The measures have burned an immense hole in the public purse, equivalent to 17 per cent of the country’s GDP. A deficit of that size is already putting pressure on spending - public sector workers are facing a pay freeze, while foreign aid spending has taken a 50 per cent cut.
But plugging the hole of this magnitude isn’t a simple question of raising taxes and enforcing austerity measures. And while the Office for Budget Responsibility might have renewed confidence that the UK economy will have bounced back to pre-covid levels by the middle of next year, the forecast is not a given. The entire nation needs to have the confidence to spend if the UK is going to remain a world leader.
And so Sunak has a tricky balancing act on his hand: continue to provide Covid-19 recovery funds, while restoring the government budget without destroying economic growth.
To find out more about what the budget announcement means for your investments, click on the links below.
Tax changes for your wallet, savings and investments
Big businesses will be expected to foot the bill of the pandemic but the limitations of corporation tax for raising money means CGT and IHT changes could be around the corner
Looser regulations around workplace pensions could see the arrival of venture capital products as the UK seeks to spur growth, especially in green opportunities
Hospitality support may not go far enough
The extension the the furlough scheme and business rate relief will help struggling companies in the travel, leisure and hospitality sectors, but not all with survive the fallout
More stimulus for the housing market
A stamp holiday extension and mortgage support scheme should keep the froth in the UK’s housing market.
