37. Weekly Newsletter

UK Tax Increases

Last week PM Johnson outlined a new 1.25% health and social care tax to help contribute towards reforms in the named sectors. The policy is anticipated to raise an extra £12bn per year for the Government and has a specific focus upon reducing the backlog of NHS appointments pent up during the pandemic. An obstacle faced by the PM was that raising taxes went against one of his key manifesto pledges which caused controversy within the low-tax party.

The new tax, featuring as part of ‘National Insurance’, (garnering around 63% of public support) will begin in April 2022 and will be paid by both employers and workers; it will then become a separate tax on earned income from 2023. An increase in the tax on dividends will equally rise by 1.25% and further contributes to the highest tax burden in 70 years. So far this year the Government has announced over £40bn of tax increases which will mainly (2/3) be borne by business.

COVID Update

Over 7.2m people in the UK have tested positive for COVID and with almost all restrictions lifted: cases appear to be flatlining after an initial surge during August. A total in excess of 134,000 deaths have been attributed to the virus; however, the PM is soon set to announce a new COVID strategy which will end any future national lockdowns. Nationally, 48.4m people have received their first vaccine and approximately 44.1m of these patients have also received their second dose. This brings the total number of inoculations carried out, by the private sector and National Health Service, to almost 92.5 million.

As the nation exits COVID restrictions, the number of people on furlough has been continuing to fall and now sits at 1.6m people. The figure represents the lowest level since the start of the pandemic and is a reduction of 340,000 from only the month previous. Chancellor Sunak’s successful furlough scheme has extended to 11.6m workers over the course of the pandemic and proved to be a vital support for many who would have otherwise lost their employment.

British Politics

Polling on the UK political spectrum shows the current ruling party, the Conservatives, to be averaging a relatively strong lead, at 38% of the country, and around 3 percentage points above the opposition (Labour). However, the 2019 General Election polled the PM’s party at 43.6% which was over 11% ahead of Labour which delivered the Conservatives’ their best victory since Margaret Thatcher in the 1980s. Approval ratings for PM Johnson have remained relatively steady over his premiership but the percentage of the population who ‘disapprove’ has slowly risen.

Upcoming events in the political calendars include the Labour Party Annual Conference (25th September) and the Conservative Party’s around one week later (3rd October). In Scotland, support for a second independence referendum has subsided over the course of the pandemic despite opposition to Brexit and the increased influence of Holyrood (the Scottish Parliament). Residents north of the English border also receive a “Union dividend” from Westminster worth £2,210 per resident and thus helps support popular Scottish policies such as free university education.

You May Also Like

38. Weekly Newsletter

Financial Forecast – Property Markets

36. Weekly Newsletter

Sweden’s New Ambassador to the UK