Pound extends losses as Chancellor Reeves reveals budget
This budget raises taxes by GBP40 billionWe will maintain BOE's 2% inflation targetOBR says budget will boost long term growthWill balance budget in third yearConfirms earlier reported rise in minimum wageWill 'catalyze' 70 billion pounds through new National Wealth FundWill increase employers' national insurance contribution by 1.2 percentage pointsWill reduce threshold for paying national insurance to 5000 pound by employersCapital gains tax: lower rate will rise to 18% from 10%, higher rate will rise to 24% from 20%Capital gains rise will raise GBP2.5B Inheritance tax threshold freeze to be extended by 2 yearsWill increase soft drink levy, will introduce tax on vaping liquidsWill cut duties on draught beer in pubsWill abolish non-domiciled tax regimeWill introduce a residence based regimeNon-domiciled tax regime will raise 12.7 billion over next five yearsWill raise tax on private equity carried interest to 32%Energy wildfall tax will rise to 38%Stamp duty on second homes to rise 2 percentage pointsFuel duty will be frozen for another yearPuts VAT on private schools and removes their business rates reliefLooking at the GDP forecasts changes from March:2024: Up from 0.8% to 1.1%2025: Up from 1.9% to 2.0%2026: Down from 2.0% to 1.8%2027: Down from 1.8% to 1.5%2028: Down from 1.7% to 1.5%2029: New forecast of 1.6%For CPI changes from March:2024: Up from 2.2% to 2.5%2025: Up from 1.5% to 2.6%2026: Up from 1.6% to 2.3%2027: Up from 1.9% to 2.1%2028: Up from 2.0% to 2.1%2029: New forecast of 2.0%The CPI forecasts are notably higher but the pound is at the lows of the day, down 77 pips to 1.2940. This is Labour's first budget in 15 years. This article was written by Adam Button at www.forexlive.com.
- This budget raises taxes by GBP40 billion
- We will maintain BOE's 2% inflation target
- OBR says budget will boost long term growth
- Will balance budget in third year
- Confirms earlier reported rise in minimum wage
- Will 'catalyze' 70 billion pounds through new National Wealth Fund
- Will increase employers' national insurance contribution by 1.2 percentage points
- Will reduce threshold for paying national insurance to 5000 pound by employers
- Capital gains tax: lower rate will rise to 18% from 10%, higher rate will rise to 24% from 20%
- Capital gains rise will raise GBP2.5B
- Inheritance tax threshold freeze to be extended by 2 years
- Will increase soft drink levy, will introduce tax on vaping liquids
- Will cut duties on draught beer in pubs
- Will abolish non-domiciled tax regime
- Will introduce a residence based regime
- Non-domiciled tax regime will raise 12.7 billion over next five years
- Will raise tax on private equity carried interest to 32%
- Energy wildfall tax will rise to 38%
- Stamp duty on second homes to rise 2 percentage points
- Fuel duty will be frozen for another year
- Puts VAT on private schools and removes their business rates relief
Looking at the GDP forecasts changes from March:
- 2024: Up from 0.8% to 1.1%
- 2025: Up from 1.9% to 2.0%
- 2026: Down from 2.0% to 1.8%
- 2027: Down from 1.8% to 1.5%
- 2028: Down from 1.7% to 1.5%
- 2029: New forecast of 1.6%
For CPI changes from March:
- 2024: Up from 2.2% to 2.5%
- 2025: Up from 1.5% to 2.6%
- 2026: Up from 1.6% to 2.3%
- 2027: Up from 1.9% to 2.1%
- 2028: Up from 2.0% to 2.1%
- 2029: New forecast of 2.0%
The CPI forecasts are notably higher but the pound is at the lows of the day, down 77 pips to 1.2940. This is Labour's first budget in 15 years. This article was written by Adam Button at www.forexlive.com.
