Chancellor Rishi Sunak delivered the Autumn Budget speech earlier today. It marks the second budget of the year, however, it is the first of Rishi Sunak's that has not been dominated by Covid spending.
The budget appears to be driven by the revised forecasts from the OBR which gave the Chancellor more fiscal headroom than anticipated. These are the key metrics to track rather than the alcohol, fuel and air duty changes as these will influence the government economic policy to a larger degree.
Nothing relating to personal wealth was mentioned at all and what was anticipated by commentators didn't happen such as alterations to pension, CGT allowances and the structure of inheritance tax. This is probably a good thing for the time being, however, this does not mean it has gone away for good.
The team at Consulo eagerly listened this afternoon, and below we have summarised the main points.
*Source, BBC, Sky News
Summary
Below we have outlined some of the highlights from today's budget:
Forecast:
The OBR have predicted that the UK will now have a swifter and more sustained recovery than initially predicted in November 2020.
2021: 6.5% growth this year, up from 4.0% forecast in March’s Economic and fiscal outlook
2022: 6% growth, down from 7.3% forecast in March
2023: 2.1%, up from 1.7% forecast in March
2024: 1.3%, down from 1.6% forecast in March
2025: 1.6%, down from 1.7% forecast in March
Inflation hit 3.1% in September and is expected to Average 4% over the next year.
Borrowing
Today's forecast is substantially under the previous forecast from March 2021. The current forecast assumes that the worst of Covid is behind us and the 2021/22 borrowing requirement is reduced by £51 billion. It is forecast to reduce rapidly down to 46 billion in 2024/25 and then stay very low by historic standards in the subsequent 2 years. The "saving" from the lower forecast is what the Chancellor has used to fund the giveaway budget.
Unemployment
Unemployment is expected to peak at 5.2%, a large change to the expectation last year of a peak of 12% and then stay relatively stable at around 4.2% through to 2026.
Debt
The new forecast revised down the level of debt by about 8-9 billion peaking in 2023/24 at 86 billion and then declining thereafter. This all presupposes that there is not another wave of a Covid variant with the usual economic disruption and potential lockdown.
The new forecast revised down the level of debt by about 8-9 billion peaking in 2023/24 at 86 billion and then declining thereafter. This all presupposes that there is not another wave of a Covid variant with the usual economic disruption and potential lockdown.
Businesses Rates
Business rates will see a 50% discount for retail, hospitality and leisure which are the sectors most affected by Covid. This is a levelling up for businesses on the high street against their internet based competitors.
Property
£1.5bn invested in brownfield land to bring it into use
£11.5bn invested to construct 180,000 new affordable homes
Levy on property developers to fund rectification of cladding issues on homes
Schools/Health Care
Health Capital Budget highest in since 2010
Resource spending on health care by the end of the Parliament will increase by £44 billion to over £177 billion
Spending per pupil in schools to return to 2010 levels
Other Taxation
Fuel duty rise cancelled.
Simplification of alcohol duty with rate based on ABV.
Annual investment relief in plant and machinery increase to £1mm extended through March 2023.
Banking Levy maintained at 3%, with a challenger bank exemption up to £100mm.
Universal Credit Taper
Universal Credit Taper Rate reduced from 63% to 55%. The Chancellor made this his final announcement as it goes some way towards replacing the extra £20 of UC which was a temporary Covid measure.
Note: This information is based on our current understanding of the autumn 2021 Budget. For any further information on any of the points above, please do not hesitate to get in contact with your adviser.
This summary has been provided by our wealth management partners, Consulo Wealth Solutions, an appointed representative of Ascot Wealth Management which is .
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