A slowdown in the UK economy will affect tax receipts and leave Philip Hammond with scant opportunity for giveaways at next week’s autumn statement, according to The Guardian.
Publishing new forecasts for GDP growth to slow next year as the Brexit vote takes effect, the consultancy firm PwC said the Chancellor could afford some spending on big projects such as housing and roads if he changed the Government’s fiscal rules. But he would not have the money for large net tax cuts and would most likely keep tight control on spending by central and local government.
Bonds
The worldwide bond sell-off gathered pace yesterday as expectations that Donald Trump will unleash a massive fiscal stimulus kicked off a global jump in borrowing costs.
The Telegraph reports that ‘benchmark UK 10-year gilt yields jumped to a near six-month high, rising to 1.49 per cent in early trading, while 10-year US Treasury yields rose to their highest since January, climbing 12 basis points to 2.27 per cent’.
Mike Amey, head of sterling portfolio management at the Pacific Investment Management Company, said greater bond market volatility was likely to be ‘with us for some time’.
Energy bills
The Times reports that measures designed to cap the household energy bills of millions of Brions on excessive standard variable tariffs are being considered by ministers.
The news follows criticism of alleged profiteering by some of the nation’s leading energy providers.
Downing Street officials and ministers at the Department for Business, Energy and Industrial Strategy have held talks in recent days with executives from the Big Six. A cabinet committee meeting has been scheduled next week to discuss whether the Government should impose measures aimed at cutting the number of British households stuck on standard variable tariffs, the most expensive available, according to Whitehall sources.
Inflation
UK inflation as measured by the Consumer Prices Index was 0.9 per cent in October, compared with 1 per cent in September, the Office for National Statistics said this morning, confounding expectations.
National insurance
Almost six million workers could be forced to pay hundreds of pounds a year more in national insurance, under new proposals.
Money Mail reports that the changes would leave three million earning over £35,000 a year worse off, and would also affect millions of workers who have more than one low-paid job.
The move, proposed by government advisers at the Office of Tax Simplification, would see HM Revenue & Customs calculating national insurance annually rather than monthly – the same way it does income tax – to make the rules simpler.
Financial experts calculated that the proposals would mean middle earners who received a pay rise or bonus would lose £242 a year each on average.
Pensions
The Financial Conduct Authority has today announced its final rules on capping early exit charges for consumers eligible to access the Government’s pension reforms from age 55.
From 31st March 2017, early exit charges will be capped at 1 per cent of the value of existing contract-based personal pensions, including workplace personal pensions. Early exit charges that are currently set at less than 1 per cent may not be increased. Firms will not be able to apply an early exit charge to personal pension contracts entered into after these rules take effect.
Christopher Woolard, executive director of strategy and competition at the FCA, said: ‘People eligible for the Government’s pension reforms should feel able to access them as they wish. The 1 per cent cap on early exit charges for existing pensions, and the 0 per cent cap for new contracts, will mean that current and future savers will not be deterred by these charges from accessing their pension pots.’
Meanwhile, drawdown regrets are putting pension freedoms at risk with savers who invested in drawdown unhappy with their choice while others admit they did not understand the risks before buying, new research from MetLife suggest.
Its study among savers who have taken out conventional drawdown found more than one in five admit they did not understand the risks they were taking while 11 per cent say they now regret their choice. Around one in eight say they regret not taking advice before investing in drawdown.
Mortgages The cost of the average five-year fixed-rate mortgage has fallen significantly over the past year, with many providers launching the lowest ever rates. This competition has seen the average five-year fixed mortgage rate fall below 3 per cent for the first time on Moneyfacts.co.uk records. Housing Housing and homelessness charity Shelter is appealing for help to fund its free helpline after seeing a surge in demand, with nearly 500,000 calls received in the past year alone. In a sign of the deepening housing crisis, the number of calls to the charity’s helpline – which is part-funded by M&S – has increased by 50,000, with a call now received every 30 seconds. Worryingly, nearly one in four cases dealt with by the Shelter helpline in the past year were people who were homeless or within 28 days of losing their home.Finally…
Grandparents are gearing up to spoil their grandchildren to the tune of £1.4 billion this Christmas, according to research by Saga Money. The UK’s over 50s have on average three grandchildren and are looking to spend £65 on each one of them as the build up to Christmas begins. When comparing Christmas past and present, almost 90 per cent of grandparents agree that children expect much more expensive presents than they did when they were children and a similar number agree that Christmas has become too commercialised. But this does not mean that they do not enjoy lavishing gifts on their family. More than half say they love being able to spend money on their family at Christmas and two thirds say they can afford to spend more on their family now than when they were younger.
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