On October 30th Rachel Reeves, the new Chancellor of the Exchequer, unveiled her Autumn budget in Parliament, offering insight on how the UK’s social and economic landscape could transform over the coming months. The Autumn budget notably made major changes to taxation, transport, and public spending.
Taxation 🏦
Although the base capital gains tax on profits from selling shares was increased from 10% to 18%, other taxes, such as rates of income tax and National Insurance (NI), will remain unchanged. This will be beneficial for consumers as stable taxation rates will maintain the level of disposable income and boost confidence for consumers. However, domestic investors could see these policies as overly scrutinous, encouraging frequent investors to become more hesitant with their financial decisions which could make it harder for businesses to raise capital.
Furthermore, even though the corporate tax will remain at 25% till the next election, requiring companies to pay NI at higher a higher rate could further impact businesses who are already struggling to garner demand from investments, causing some companies to possibly become insolvent.
Transport 🚋
Through an increase in single bus fare caps (outside London and Greater Manchester), alongside a 5p cut in fuel duty on petrol and diesel and a £500 million increase in pothole repairs investment, the Labour government seem to be gearing to accommodate for road users instead of public travel commuters for now. This could discourage environmentalists who may have expected the new government to begin transitioning fossil fuels out of the UK’s future.
Public Spending 🏡
From permitting rent increases and reducing discounts for social housing tenants, the Labour government appear to have cut back support for those in need following an intense cost of living crisis period. Economically, this decision could also reduce the ability for employees to move to new geographies in the UK and actively seek work, increase the unemployment rate and harming the UK’s economic performance.
Writer – Imran Chaudhri
Sources BBC News
Financial Times
Disincentives and Taxes – Rachel Reeves Autumn Budget Summarised and Explained
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