What are the key takeaways from Rishi Sunak’s Budget statement? Hear what our experts have to say on the Budget and the economy, green finance and sustainability and personal taxation.
Commenting on the budget and the economy the Daniele Antonucci, Chief Economist & Macro Strategist at Quintet Private Bank, said:
“The budget looks less fiscally ‘hawkish’ than initially feared by the market. Even though corporation tax will rise, this is set to happen only from April 2023. The more immediate priority is to continue to provide significant support to the economy, given the impact of Covid-19. The fiscal plan appears sensible in its principles of spending to cushion the blow of acute crises and to finance investment, while avoiding borrowing to finance current spending in more ordinary times.
“While economic activity is now projected to recover somewhat more quickly from the pandemic than previously thought, continued stimulus is needed, given significant forecast uncertainty. At the same time, the debt trajectory looks uncertain too, especially if bond yields and inflation were to rise more than expected.
“The ‘super deduction’ is encouraging. The 130% reduction in costs for companies that invest is quite unheard of for a UK government. It could boost capital expenditure and perhaps also lift growth more structurally over the longer term.”
Commenting on green finance and sustainability, James Purcell, Group Head of ESG, Sustainable, and Impact Investing at Quintet Private Bank, said:
“The EU has long been seen as the leader in green finance and sustainability. With this budget the UK has demonstrated that in a post-Brexit world, these are areas where Britain can credibly compete.”
“We can’t get to net-zero without taking carbon out of the atmosphere. Carbon offsets are a critical part of the toolkit – scaling credible offsets is hugely important, and the City of London now has the opportunity be the world leader.”
“If the UK is to green the economy and avert away from a climate emergency, we have to engage with everyday savers. The new sovereign green bond is an innovation that can connect with ordinary people up and down the country."
“There are question marks about the size of the Government’s investment – is GBP 12bn enough? In some ways, that’s missing the point – we need to mobilize savers and private-sector capital. The sovereign green saving bond and new infrastructure bank is a step in the right direction to encourage engagement from the population.”
Commenting on personal taxation, Rebecca Williams, Head of Wealth Planning at Brown Shipley, said:
“As anticipated, whilst the rates of income tax were not increased, the Chancellor has frozen personal income tax allowance and income tax thresholds. There will be a brief thaw in April 2022 when the personal income tax allowance and thresholds will increase but the big freeze lasts until 2026, plunging more and more taxpayers into the higher tax brackets.
“Changes to Capital Gains Tax were widely anticipated but ultimately didn’t materialise today, with the Chancellor rightly focusing on the pressing matter of kick starting the economy. The CGT exemption of £12,300 will be frozen until 2026. However, we shouldn’t be lulled into a false sense of security. This doesn’t preclude the Chancellor raising rates of CGT and the spectre of alignment with income tax rates is still hovering in the background.
“The pensions Lifetime Allowance (LTA), the amount that individuals can pay into personal pensions before incurring tax charges, has also been frozen, increasing the number of people who will breach the LTA by the time they retire and the yield to the Treasury!”
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