10. Weekly Newsletter
UK Budget 2021
On Wednesday, the 3rd of March, the Chancellor unveiled the Budget for the year to widespread approval from the public. The pressures of the Budget were to work on a swift economic rebound following an almost 10% contraction in GDP during 2020. Furthermore, 700,000 people have lost their jobs since the beginning of the pandemic and unemployment could now peak at 6.5% over the year.
The key points of the Budget were:
- No changes to rates of income tax, national insurance or VAT
- Corporation tax on profits above £250,000 to rise from 19% to 25% in April 2023
- No tax charged on sales of less than £500,000
- Extra £1.65bn for vaccination rollout
- £400m for arts to re-open and £325m for sports
- Firms will be able to “deduct” investment costs from tax bills (reducing taxable profits by 130%)
- Contactless payment limit to rise to £100
- Fuel duty frozen for 11th consecutive year
- No rise in Tobacco duties
- Establishment of new UK Infrastructure Bank with £12bn in capital with aim of £40bn worth of projects
- £15bn in green bonds
- First 8 sites announced for freeports
The UK is now achieving the lowest number of COVID cases in 5 months and deaths have been under 100 (per day) for a second day in a row as the benefits of the vaccine begin to show. This could potentially change as the nation begun the reopening of schools on Monday (8th March); the Education Minister has introduced the idea of longer school days with shorter holidays to help regain lost learning.
A total of around 22.5m have now received their first vaccine dose and almost 1.2m of these people have had their second. The current average rate of vaccinations is near 400,000 per day which has led to almost a third of the entire national population being inoculated. However, the take-up among ethnic minorities has proven to be less successful which has noticeably lowered the vaccination rate in London.
IKEA & Pubs
The Chief Executive (Brodin) of INGKA Group, the holding company of IKEA, has warned that global trade tensions could lead to customers experiencing higher prices. Brodin stated that imposing restrictions such as tariffs “normally doesn’t benefit the ordinary people” and the WTO have also acknowledged that trade restrictions were rising well before the pandemic. The company has struggled with fresh tariffs in India, as part of a national self-reliant drive, and with the closure of UK stores has been forced to sell online.
Across the UK there are around 39,000 pubs and the nation holds the 5th largest alcoholic drinks market worldwide (at £69.2bn per year). With plans to open beer gardens from the 12th of April there are signs that normal life is returning to Britain; however, the pent-up demand is likely to lead to an unprecedented surge in demand with one pub in Leeds taking 700 bookings in 5 hours this week. The measured reopening of the UK could mean all restrictions are lifted by the 21st of June.