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Read moreMonday Musings 27/09/2022
The Mini Budget
We have to talk about this today. Of course we do. But this is a very difficult Monday Musings to write. The market reaction to the Mini Budget has not been positive, with the pound falling even further against the dollar. Of course, our portfolios invest in a range of markets, not just the UK, but its still not great news. I’ve even seen Liz Truss’s policies as ‘going back to the 1980’s on steroids’.
But I’ve also seen some holding firm to the belief that the changes will be positive over the long term, which of course is always what we focus on for our investors – the long term. And it is true that the pound has already recovered a little – from a low of $1.0327 back up to $1.08 already.
There have been calls for Parliament to be recalled. I don’t think this will happen, but if it does, and if the emergency debates trigger an election, be ready to vote!
For those of you who will be positively impacted by they tax cuts proposed, now could be a good time to utilise that extra cash to invest whilst buying is cheap. Certainly confidence and spending in the markets is what we need.
Here are some of the key takeaways from the ‘mini budget’:
- The basic rate of Income Tax will be cut to 19p in the pound from April 2023, while the 45% Income Tax rate for higher earners is to be abolished.
- The 1.25% increase in National Insurance contributions announced in April 2022 is to be reversed from 6th November 2022.
- The Treasury estimates these tax cuts combined will cost roughly £45bn a year by 2026.
- Stamp Duty is cut from today, and will not be paid for the first £250,000 of a property’s value (twice the current threshold). The threshold for first-time buyers is increasing from £300,000 to £425,000.
- The 2023 planned rise in Corporate Tax from 19% to 25% is cancelled.
- Tax reliefs available through Venture Capital Trusts (VCTs) and the Enterprise Investment Scheme (EIS) have been extended
So, to the markets,
31.12.2021 | 27.09.2022 | % Change | % Change on week | |
FTSE 100 | 7384 | 7017 | Down 4.97 | Down 0.04 |
Dow Jones | 36338 | 29484 | Down 18.86 | Up 0.77 |
Nasdaq | 15645 | 10953 | Down 29.99 | Up 1.38 |
S&P | 4766 | 3691 | Down 22.55 | Up 1.00 |
NIKKEI | 28791 | 26571 | Down 7.71 | Up 0.53 |
Hang Seng | 23398 | 17860 | Down 23.66 | Up 0.03 |
Shanghai | 3640 | 3093 | Down 15.02 | Up 1.40 |
CAC 40 | 7153 | 5782 | Down 19.16 | Up 0.25 |
DAX | 15885 | 12220 | Down 23.07 | down 0.06 |
I had a strange encounter on Facebook this week (sounds silly, bear with me…). A new mum put a post up on a local group asking for help. She said.
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