{"id":4396,"date":"2022-02-02T13:25:39","date_gmt":"2022-02-02T13:25:39","guid":{"rendered":"https:\/\/new.contentdeployment.co.uk\/tomd\/?p=4396"},"modified":"2022-07-05T14:10:06","modified_gmt":"2022-07-05T13:10:06","slug":"news-in-review-41","status":"publish","type":"post","link":"https:\/\/new.contentdeployment.co.uk\/tomd\/2022\/02\/02\/news-in-review-41\/","title":{"rendered":"News in Review"},"content":{"rendered":"
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\u201cThe economy has\nrecovered more quickly than expected, creating a growth dividend for the\nTreasury\u201d<\/em><\/strong><\/p>\n<\/div>\n\n

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Some interesting data was released\nlast week, which prompted speculation as to the Chancellor\u2019s intentions\nregarding the rise in National\nInsurance Contributions (NICs) in April. The data showed that government borrowing reached\nnearly \u00a317bn in December; despite this being the fourth highest December figure\never recorded, the figure was below expectations. Total borrowing i<\/strong>n the first\nnine months of the 2021-22 financial year was \u00a3147bn, \u00a313bn lower than Office\nfor Budget Responsibility (OBR) projections outlined in the Autumn Budget.<\/strong><\/p>\n<\/div>\n\n

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At\n\u00a316.8bn, public sector borrowing was \u00a37.6bn lower than the December 2020 figure.\nThe\nOBR said the deficit was less than anticipated due to higher Corporation Tax, Income\nTax and VAT payments. The drop\nin the UK\u2019s deficit led many commentators to speculate that a rethink about the\nplanned increase in NICs could be on the cards as a cost-of-living crunch looms for\nmany people. <\/p>\n<\/div>\n\n

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Commenting on the Office for National\nStatistics (ONS) figures, Julian Jessop of the Institute for Economic Affairs, said this\nprovides the \u201cfiscal room\u201d<\/em> to discard the proposed NICs rise, adding, \u201cThe\neconomy has recovered more quickly than expected, creating a growth dividend\nfor the Treasury. <\/em>Higher inflation is increasing the amount that\nthe government has to spend on interest payments on inflation index-linked\ndebt. However, the accompanying rise in nominal incomes is also increasing tax\nrevenues and reducing the burden of debt as a share of GDP.\u201d<\/em><\/p>\n<\/div>\n\n

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He\ncontinued, \u201cThe government may still need to find more money later to fund a\nlong-term increase in spending on health and social care, but the NICs hike in\n2022-23 was intended to help with the one-off costs of fixing the backlog of\nNHS work caused by the pandemic. It is therefore entirely credible to use the\ngrowth dividend to pay these costs, rather than adding even more to the tax\nburden by raising NICs now.\u201d<\/em><\/em><\/p>\n<\/div>\n\n

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Heavily\nopposed but standing firm<\/strong><\/p>\n<\/div>\n\n

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Under the heavily criticised plans, employees, employers and the\nself-employed will be subject to a 1.25 percentage point National Insurance increase\nfrom April 2022 for a year. From April 2023, the extra tax will be collected as\na new Health and Social Care Levy. <\/p>\n<\/div>\n\n

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However,\nover the weekend, Boris Johnson and Rishi Sunak insisted the \u201dprogressive<\/em>\u201d\n\u00a312bn NICs increase would go ahead, \u201cWe must clear the COVID backlogs\u2026 We\nmust go ahead with the Health and Social Care Levy. It is the right plan.\u201d<\/em> <\/p>\n<\/div>\n\n

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Lisa Nandy, Shadow Levelling-Up Secretary urged the government to “rethink”<\/em>\nthe planned rise, “You can’t possibly hit people with more taxes at the\nmoment. It’s just simply not possible for a lot of people to survive.”<\/em><\/em><\/p>\n<\/div>\n\n

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UK regains allure for <\/strong>global financial services businesses<\/strong><\/strong><\/p>\n<\/div>\n\n

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A recent poll of senior decision-makers at international banks, asset\nmanagers and insurers, conducted by EY (Ernst & Young), determined that 87%\nof global financial firms intend to extend or expand operations in the UK this\nyear \u2013 the highest percentage since 2016, and a marked increase on previous results\n(50% in 2021, 45% in 2020 and 11% in 2019). Notably,\nthe vast majority (90%) of global financial services investors believe the UK\nwill retain the same level of attractiveness or improve over the next three\nyears. In addition, 87% of respondents said the UK offers the right environment\nfor ESG (Environmental, Social and Governance) investment. UK Financial Services Managing\nPartner at EY, Anna Anthony commented on the findings, \u201cIt\u2019s encouraging\nthat such a high proportion of global financial services firms are currently\nlooking to grow their business in the UK. This is testament to the stability\nand resilience of the mature UK market which continues to ably withstand the\nmaterial challenges and uncertainty of both the pandemic and Brexit. As we look\nto the future of financial services, it\u2019s also positive that investors see the\nUK as the right place for growth in ESG, which, post COP26, is a major and\nincreasing focus for boards.\u201d<\/em><\/p>\n<\/div>\n\n

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US economy advances at pace<\/strong><\/strong><\/p>\n<\/div>\n\n

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Last week, official data from the Commerce Department showed that\nthe US economy expanded by 5.7% in 2021 \u2013 its strongest performance since 1984.\nWith the Federal Reserve signalling the imminent withdrawal of stimulus, growth\nis expected to moderate this year. On Wednesday, the Fed said it is likely to\nhike interest rates in March, the first increase since 2018, and reaffirmed\nplans to end its bond purchases in the spring also.<\/strong><\/p>\n<\/div>\n\n

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Here to help<\/strong><\/p>\n<\/div>\n\n

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Financial\nadvice is key, so please do not hesitate to get in contact with any questions\nor concerns you may have.<\/p>\n<\/div>\n\n

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The value of investments can\ngo down as well as up and you may not get back the full amount you invested.\nThe past is not a guide to future performance and past performance may not\nnecessarily be repeated.<\/strong><\/strong><\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

\u201cThe economy has recovered more quickly than expected, creating a growth dividend for the Treasury\u201d Some interesting data was released last week, which prompted speculation as to the Chancellor\u2019s intentions regarding the rise in National Insurance Contributions (NICs) in April. The data showed that government borrowing reached nearly \u00a317bn in December; despite this being the […]<\/p>\n","protected":false},"author":12,"featured_media":4397,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[32,112],"tags":[],"hd_content_source":[],"_links":{"self":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts\/4396"}],"collection":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/comments?post=4396"}],"version-history":[{"count":3,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts\/4396\/revisions"}],"predecessor-version":[{"id":4400,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts\/4396\/revisions\/4400"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/media\/4397"}],"wp:attachment":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/media?parent=4396"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/categories?post=4396"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/tags?post=4396"},{"taxonomy":"hd_content_source","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/hd_content_source?post=4396"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}