Some positive news has emerged regarding the economy as early Spring marked an upturn in the number of mortgage applications being approved. The figures are encouraging as they come off the back of an extended period of below average lending for house purchases, viewed by the government as one of the mainstays of the British economy.
The freeze on income tax thresholds is creating a series of tax cliff edge situations for middle income earners according to analysts. The Chancellor has made clear that the income tax thresholds will not change for a ‘few years’ meaning thousands of people are finding themselves paying more tax as their pay increases move them into the next bracket or create effective tax rates through loss of other income streams.
How on earth do you deliver an economy boosting budget when there’s no spare cash for headline grabbing giveaways, you have double digit inflation, you may or may not be heading into a recession, there’s war in Europe and the country is still struggling to recover from the impact of Brexit and the Covid pandemic? That was the uphill challenge facing Chancellor, Jeremy Hunt, when he stood up on 15th March to deliver his Spring Budget.
From 1st April 2023, the National Living Wage and National Minimum Wage will rise by an average of nearly 10% across the board (9.94%), helping to support the lowest paid workers but potentially causing a further burden on the businesses employing them.
Reports from the hospitality sector have shown a significant increase in the number of pubs closing, amidst challenging circumstances. The research data is based on a year-on-year comparison of the number of insolvencies for pub firms and it shows a 180% increase in the last 12 months.
The number of companies collapsing into insolvency towards the end of 2022 increased significantly. Having already seen 1,948 businesses closing down in October, the November figure was even higher with 2029 shutting up shop. As well as showing an increasing trend for the year, these figures also represent an alarming jump year-on-year and also when we look back to pre-pandemic statistics.
If you have responsibility for budgeting in your business, the events of the last couple of years will undoubtedly have kept you busy and will probably have thrown some challenges your way. You’re not alone. Businesses everywhere are struggling to set and maintain accurate budgets, beset on all sides by world events and economic trends.
So how do you budget effectively, and more to the point accurately, with so many external influences at play?
One of the problems with historical records is they sound grand but often end up obfuscating other historical records. The announcement by The Bank of England on 3rd November that interest rates were to rise by three-quarters-of-one-percent (0.75%) meant that this was the biggest single jump in rates for more than three decades, thirty three years to be precise. Whilst not ignoring the significance of this move, it could allow us to forget that this also brings to an end one of the longest periods of low interest rates in history.
If there’s one thing the recent hokey cokey of Chancellors and fiscal policy has achieved it has to be a rigorous testing of our sentiment towards taxation. Whilst it is hard to imagine that anyone has found this funny or even useful for personal and commercial planning purposes, as a research case study it provides tremendous insight on public opinion and our threshold for taxation.
There was a lot announced in the mini budget that took place on Friday 23rd September 2022 and it has had a significant impact on markets and currencies ever since.
Our summary of the full statement, helps you understand all of the changes, when they will come into effect and how they might apply to your personal or commercial circumstances.
Just when we thought that Covid might have been the final nail in the coffin for cash, it would appear that the cost of living crisis has given it somewhat of a reprieve, even a chance for revival. Data from the Post Office suggests that the amount of cash deposits and withdrawals in July 2022, was the highest it’s been in five years.
In a slightly bizarre twist, as the Bank of England was announcing its recent interest rate increase of half-of-one-percent, it was also scrapping a key affordability test that lenders had to conduct to ensure borrowers could afford… an interest rate increase!