Brexit wasn’t the beginning of our financial woes even though it shrank the economy by an eye-watering £140 billion. Today, the cost of living crisis, a grim reality experienced by millions daily, is a combination of several factors well beyond the government’s control.
A global pandemic and two international conflicts have had negative economic impacts across the world. This isn’t to say that poor policy decisions like cuts in public spending and inconsistent tax measures before 2019 haven’t played their part. These were further compounded by political instability and low investments.
Amidst the backdrop of a weak economic forecast, what does the new budget hold for a previously sluggish economy? But more importantly, what does it mean for your financial well-being?
While cautiously optimistic, we highlight 5 ways the new budget can boost your financial health.
1. Giving your pockets a breather
The new budget is set out with a mission to rebuild Britain. It has included an increase in public spending but has made some tough decisions on taxes. While there’s a general increase in VAT, capital gains tax, inheritance tax and stamp duty on houses, there are no changes to the tax-free thresholds till 2028. Additionally, adjustments in National Insurance Contributions (NIC) could improve take-home pay and give your pocket a breather.
What could all this mean for those with poor credit scores who often rely on bad credit loans? The budget is looking to expand investments in debt advice services to provide better financial advice and finance alternatives to those looking to manage their debt better.
Payday loans & other bad credit loans may see further regulations to protect borrowers from placing additional interest rate caps. This should come as a relief for those struggling with debt repayment and help them access the best bad credit loans. There are also budgetary provisions for non-profit lenders & credit unions that can help with low-cost credit options.
2. Transitioning to Greener Energy
The budget has listed ambitious measures for making the country a green energy hub. It has made budgetary allowances and investments for investing in green homes and environmentally sustainable agricultural practices, introducing tax incentives for EV owners, and phasing out non-hybrid vehicles by 2030. These are expected to reduce utility bills and stabilise energy prices.
3. Support for Families
For families with children, the budget has made provisions for supporting working parents to tackle rising costs related to childcare as well as improve access to support services.
This will benefit working couples, as the budget is investing in the expansion of free childcare hours to encourage greater worker participation, especially among working mothers.
Other measures towards family support include enhanced parental leave pay rates, tax-efficient voucher systems, and increased support for childcare providers. There’s also a substantial investment in early childcare, like expanding school-based nurseries & more.
4. Long-Term Savings Are Here To Stay
The cost of living crisis has seen a steady rise in prices and an equally steady decline in savings. The budget has introduced measures to help first-time home buyers and encourage long-term savings.
Individual savings accounts (ISA) have always been the go-to financial tool. The budget seeks to raise the annual contribution limits to these as well as stocks & shares ISAs & cash ISAs. This has obvious benefits to those trying to save up for emergency funds or other financial goals.
The Help-to-Save scheme deserves a mention here as it seeks to encourage young savers to set aside money early on & enjoy government bonuses to do the same.
First-time buyers also stand to benefit, as an exemption in stamp duty thresholds may reduce upfront costs. They’ve also introduced ‘First Home Schemes’ to offer property prices at reduced rates to encourage affordable housing.
5. Increase in Living & Minimum Wage
Rising inflationary costs and energy bills were draining most households. As a result, many saw a reduction in their purchasing power. The autumn budget’s best provisions so far have been to increase both the living wage and minimum wage, which would provide great relief to the average individual.
The living wage, which stands at £10.42 per hour, is set to increase to approximately £11.50. Full-time employees & low-income households stand to gain the most from this. The minimum wage is being increased to £10.80 per hour for young workers, while apprentices could receive up to £5.70 per hour. This would boost greater workforce participation in young adults and help them manage their cost of living better.
Conclusion
For many, the new autumn budget looks promising. The provisions could see an increase in first-time home ownership, greater workforce participation for both young adults and mothers, greater savings potential, better support for families, and a sustainable livable future for the country.
Affordable credit alternatives and regulation of high-interest loans could see better debt management, thereby improving credit scores. The government has laid out an effective budget to tackle the cost of living crisis and the Brexit fallout to boost stability & growth across all sectors.
While the immediate positive impacts of the budget may take some time to show on economic growth, for the most part, we look forward to seeing better days ahead.
