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News Update: A Mini-Budget, or Just an Economic Update this July?

In the expected July economic update, Chancellor Rishi Sunak is set to announce limited fiscal measures to support the economy. However, it may not be the “emergency budget” or mini-budget as many have previously speculated.

This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice. 

Chancellor Sunak recently postponed a major stimulus package of tax cuts and spending pledges until the autumn announcement, choosing a “wait and see” approach with the economy before instituting anything official.

After increasing the nation’s budget deficit with a £133 billion bid to aid economic recovery from the pandemic, the chancellor will be considering the state of the economy and reviewing which areas are in need of additional assistance and prioritising support for them.

New OBR head selected

Ahead of this announcement, the Chancellor selected Richard Hughes as the head of the Office for Budget Responsibility (OBR). Hughes has in-depth knowledge of fiscal rules and his work includes research into the impact of the pandemic with projections for three, six, and 12-month increments. So, he’s prepared for the potential effects of an extended outbreak scenario with responses the government could take to combat them.

Hughes has previously also studied outcomes of a “no-deal” Brexit, which might serve him well after a previous setback in trade talks has brought the possibility back into discussions.

What should be addressed?

In the imminent announcement, job losses need to be addressed and a plan that will help repair and rejuvenate the economy should be proposed. Chancellor Rishi Sunak should also consider how to handle the population of the public that has been laid off, investment in UK tech businesses, and announce a national infrastructure strategy, as it was delayed from March.

It is rumoured that the Treasury is considering temporary VAT cuts to help sectors such as, tourism, pubs and restaurants. This would potentially lead to deferred tax rises in the autumn.

While new tax legislation isn’t expected to be announced in July, the pressure is still on to determine tax increases to help deal with the effects of the coronavirus and avoid a backlash against tax cuts. Despite demand from many MPs to delay tax increases, there needs to be some kind of plan to aid recovery.

Be sure to check back with us after the announcement for pertinent information that will help you make future financial decisions.

How will the economic update affect your financial planning?
Investments | Financial Planning | Retirement | Save Tax | Protection |

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