UK raises minimum wage to boost ‘working people’
The minimum hourly wage for those over 21 in the UK will rise 6.7% from April next year to 12.21 pounds ($15.87), Finance Minister Rachel Reeves said on Tuesday, signaling the UK may take further steps to support “working people”. ” measures. Wednesday’s budget.
For young workers aged 18 to 20, the minimum wage will rise by 16% to £10 an hour, while for apprentices aged 16 to 17 the hourly rate will rise by 18% to £7.55.
The increase is aimed at keeping the adult minimum wage at two-thirds of median earnings, as new data shows average earnings in 2023 are higher than initially expected and is expected to rise further.
The government, which has vowed to protect “working people”, said the measures were expected to benefit more than 3 million workers.
— Karen Gilchrist
Tax hikes, spending: Economists’ expectations
Prime Minister Sir Keir Starmer holds a “conversation” with Goole UK&I managing director Debbie Weinstein during the ACC Labor Party conference in Liverpool.
Stefan Rousseau – PA Pictures | PA Images | Getty Images
After months of comments from Labor officials, economists are eyeing billions of dollars in new public spending and tax increases ahead.
The party has announced a number of areas from which additional tax will be generated, including changes to the rules for so-called “non-doms” who permanently reside outside the UK for tax purposes; a higher tax on energy profits; purchases of UK residential property overseas Tariffs paid by citizens increased; value-added tax (VAT) was imposed on private school fees.
Researchers at Barclays said in a report last week that they expected between 20 billion pounds ($26 billion) and 36 billion pounds of additional spending from 2025 to 2026, which would be offset by about 20 billion pounds from tax increases. offset by additional revenue of £23 billion.
The BBC quoted government sources as saying reported The Budget will increase the percentage of NI paid by employers per worker and reduce the rate at which they start paying. According to economists, this could raise a total of £20 billion.
Deloitte Consulting Highlights Some of the unknowns to be aware of in the budget include changes to business rates, capital gains tax, inheritance tax and taxation on the performance of interest payments carried by private equity.
Investec economists said in a note on Monday that budget measures could include higher capital gains taxes on stock sales; closing or reducing benefits from the “carried interest loophole”; potential changes to the pension system, such as Reduce the amount of a lump sum that can be withdrawn tax-free; and close some estate tax loopholes. It is said that air passenger tax and bank corporate tax surcharges may also be increased.
Analysts also said that the so-called “Sin tax” Potential Labor targets include gambling, vaping products and tobacco.
—Jenny Reed
UK fiscal rules are about to change
Finance Minister Rachel Reeves Confirmed last week As part of her budget, she plans to change Britain’s fiscal rules to allow her to free up billions of pounds for investment.
written in financial timesReeves said the change “will create space for increased investment in the fabric of our economy and ensure we do not see the decline in public sector investment planned by the previous government.”
Reeves did not specify what investment rules would change, but has report Instead of public sector net debt, the Treasury could use public sector net financial liabilities (PSNFL) as a measure of UK debt.
The PSNFL indicator takes a broader view of the government’s balance sheet, including financial assets and liabilities, than public sector net debt.
The Institute for Fiscal Studies is an influential think tank, explain Financial rule changes for the PSNFL on September 30 will provide the government with up to £50 billion ($64.8 billion) in additional space.
— Sam Meredith
‘Painful’ but no return to austerity: Labor leader on budget
Prime Minister Keir Starmer and Finance Secretary Rachel Reeves have sent a clear message in the run-up to the Budget: pain now, gain later in the form of economic growth.
Starmer has Says his government will make “painful” decisions To close the huge budget gap left by the previous government, he added, “those with the broadest shoulders should bear the heavier burden”.
An early controversial decision was to make the winter fuel allowance for pensioners means-tested.
His pledge not to raise taxes on “working people” sparked debate over the definition of that group. subsequent Comments from Labor Party figures It is proposed that this is a commitment not to raise income tax or National Insurance contributions; but does not rule out higher taxes on business owners or those who earn income through assets such as shares or property.
On October 28, 2024, just days before the first budget of the new Labor government was announced in Downing Street, London, England, British Prime Minister Keir Starmer met with Chancellor of the Exchequer Rachel Reeves ( Rachel Reeves). Starmer and Reeves will meet ahead of Wednesday’s Budget.
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Reeves vowed that there would be ‘There will be no return to austerity’ Reference is made to the economic plan launched by the Conservatives in the aftermath of the 2010 global financial crisis, which involved deep cuts in public spending.
She said this was because she would increase investment in areas such as infrastructure and the energy transition.
All eyes are now on how Starmer and Reeves try to balance promises of increased public investment and increased funding for troubled areas such as the National Health Service, while meeting their self-proclaimed demands. Fiscal Rules Balance the budget and see debt-to-GDP decline within five years.
Bond market ‘nervousness’ in focus after Truss 2022 crash
The Bank of England established the City of London on October 8, 2024 in London, England.
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The British bond market’s reaction to Wednesday’s budget, which is due to be released in two years’ time, will be closely watched. Huge unfunded tax cut plan Former Prime Minister Liz Truss’s announcement sent yields soaring.
“If there’s one thing bond vigilantes hate more than big budgets, it’s surprising,” George Lagarias, chief economist at Forvis Mazars, said on Tuesday. Huge budget.
“It’s a challenge when a new prime minister presents a budget. It’s even more of a challenge when it represents a completely new government, especially from a party known for fiscal expansion. Bond markets have been particularly nervous over the past few weeks, adding to the difficulty as traders find themselves needing to recalibrate U.S. interest rate expectations based on strong growth data,” Lagarias said.
“change accounting rules This is a very old practice that may not be very effective when the bond market takes a closer look[at the Budget]… However, ultimately, if the government is to maintain the productivity of its citizens, it needs to find ways to significantly increase productivity. ” Lagarias added.
The current macroeconomic backdrop is “less conducive to a bond market panic than September 2022 (under Truss),” Capital Economics assistant economist Joe Maher said in a note on Monday. ” at a time when there were concerns that fiscal expansion would push inflation and interest rates higher.
“In contrast, we suspect investors may now be more tolerant of looser fiscal policy given that inflation has fallen back to the Bank of England’s 2% inflation target and interest rates are likely to be trending lower,” Maher said.
Maher added that Labor’s repeated assurances about its fiscal prudence, the fact that the increase in government borrowing would likely be less than what Truss’ plan requires and the fact that the increased borrowing would be used for public investment should also ease bond market jitters.
—Jenny Reed
