9. Weekly Newsletter
UK Budget 2021
On Wednesday, the 3rd of March, the Chancellor of the Exchequer will publish the UK Budget for 2021 which will come alongside the most current forecasts from the OBR. The upcoming budget is facing the challenge of cutting back from the around £400bn deficit this year whilst facing pressures to increase public funding and limit tax rises. The Budgets are typically relatively predictable but often feature a few surprises towards the end.
This year’s Budget is unusually unpredictable as previous campaign spending objectives were made pre-pandemic in December 2019. The furlough scheme is expected to be further extended beyond April but recent news coverage has suggested tax hikes are also likely to be introduced. An increase in fuel duty, corporation tax and additional charges to the self-employed are being said to be under consideration. The potential rise in capital gains tax, which could be revealed this month, would lead to a significant change for most investors- just a week after London has risen to the top of the ‘dollar millionaire league table’. The city now has around 875,000 dollar millionaires and over 68,000 homes worth in excess of £2m- which helped surpass New York City this year.
Daily COVID cases in the UK continue to rapidly decline at a pleasing rate for HM’s Government. Over the last week the infection rate (5,455 per day) almost halved and deaths fell 42% to 104 per day. This brings the total number of deaths to 123,000 and 4.1m positive results. The first stage in the lifting of restrictions begins on the 8th of March as schools fully re-open and then from the 29th of March outdoor sports will restart alongside other activities.
A total of around 20.5m have now received their first vaccine dose and almost 900,000 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. Furthermore, in a bid to limit the spread of mutant viruses across the continent: the UK is set to discuss the introduction of a ‘COVID Passport’ with the EU soon.
British Auto & Aviation Industry
The Society of Motor Manufacturers and Traders (SMMT) has released data highlighting that the number of cars built in the UK fell by 27% in the month of January compared to the same time last year. These unwelcome figures show just 86,000 cars were built during the period and are the lowest numbers in over a decade. Furthermore, they represent the 17th consecutive month of decline for vehicle production due to supply chain issues and the worldwide pandemic. However, Jaguar Land Rover were still able to post a £439m pre-tax profit for Q4 in 2020 following substantial restructuring and another 2,000 staff are currently being made redundant.
Europe’s third largest airline group, IAG (the owners of British Airways), on Saturday published their financial reports for the year which revealed a £6.4bn loss in 2020 and that the company had been burning through £160m of cash per week. This had been further worsened by the 10,000 BA staff made redundant and equated to a quarter of the entire workforce. Heathrow also detailed a slump of 89% in passenger numbers for January whilst COVID-related travel restrictions remain. Although, hopes for a recovery over the summer continue with the possibility of a ‘vaccine passport’.