Study suggests UK workers ‘have already lost a week’s wages’ to Brexit

A study carried out by the University of Warwick’s Centre for Competitive Advantage in the Global Economy (CAGE) has revealed that the average UK worker has already lost a week’s wages as a direct result of Brexit.

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According to the study, in the first year following the Brexit referendum, the average worker had to spend more than £404 as a result of rising prices.

In order to maintain the same lifestyle, the average UK household was required to spend £7.74 more per week.

Commenting on the findings, Dennis Novy, Economics Professor at the University of Warwick, said: ‘It is clear that the average UK household is already paying the price for voting to leave the EU.

‘The economic effects of leaving the EU will depend crucially on the outcome of the ongoing negotiations between the UK and the EU. But even before Brexit has actually taken place, the referendum shock of June 2016 has already had substantial economic costs for the typical household.’

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Hammond delivers pre-Brexit Budget

Chancellor Philip Hammond has delivered his second Autumn Budget, exactly five months before Britain is due to leave the European Union.

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The Chancellor was in bullish mood, asserting that the era of austerity is ‘finally coming to an end’ after a ‘long, hard journey’. However, he maintained that UK debt remains too high and highlighted the importance of continuing to reduce debt and borrowing.

Citing the latest economic forecasts from the Office for Budget Responsibility, Mr Hammond revealed that the UK growth forecast has been upgraded from 1.3% to 1.6% for 2019, while public borrowing in 2018/19 is set to be £11.6bn lower than previously forecast at the time of the Spring Statement.

With the Brexit negotiations ongoing, the Chancellor announced an additional £500m of departmental funding for Brexit preparations. He also raised the possibility of upgrading the 2019 Spring Statement to a ‘full fiscal event’ if no deal was agreed.

Key announcements for businesses include a two-year cut in business rates for small retail firms in England from April 2019, worth £900m, together with a £675m fund to help rejuvenate high streets. The Annual Investment Allowance (AIA) will also increase from £200,000 to £1m, for a period of two years.

Meanwhile, individual taxpayers are set to benefit from a bringing forward of the planned increase in the income tax personal allowance, which will rise by a further £650 in April 2019 to £12,500. The higher rate threshold will also increase from £46,350 to £50,000. However, from 2021, both thresholds will rise in line with CPI inflation.

The stamp duty relief for first-time homebuyers will be extended to shared equity purchases of up to £500,000, while the lifetime allowance for pension savings will increase to £1,055,000.

As widely anticipated, the Chancellor confirmed plans to introduce a new tax on the UK revenues of digital services companies from 2020, applying to those with global sales of more than £500m per annum. However, plans for a tax on takeaway coffee cups were overruled in favour of a new tax on plastic packaging containing less than 30% recycled material.

Turning to duties, tax on beer, most cider and spirits have been frozen. Wine duty will rise in line with inflation, while tobacco duty will continue to rise by inflation plus 2%.

Other announcements include confirmation of an extra £20.5bn for the NHS over the coming five years, together with additional funding to help welfare claimants transfer to Universal Credit. An additional £950m will be made available for the Scottish government, £550m for the Welsh government and £320m for the Northern Ireland Executive for the period to 2020/21.

2018 Autumn Budget – the political reaction

Addressing the House of Commons, Chancellor Philip Hammond stated that the 2018 Autumn Budget was one ‘for Britain’s future’, highlighting how ‘the perseverance of the British people’ is finally paying off.

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However, Labour Party leader Jeremy Corbyn labelled the Budget as a ‘broken promise Budget’, full of ‘half measures and quick fixes’.

He added: ‘And far from people’s hard work and sacrifices having paid off, as the Chancellor claims, this government has frittered it away in ideological tax cuts to the richest in our society.’

Meanwhile, Vince Cable, leader of the Liberal Democrats, said that the Budget acted as a ‘sticking plaster’, stating that more cash is needed to end austerity – up to £19 billion would be required, he said, referencing figures produced by the Institute for Fiscal Studies (IFS).

The Green Party too were disappointed with the Budget. Green MEP for the South West, Molly Scott Cato, responded to the Budget, saying: ‘Rather than action to avert climate breakdown we saw the Chancellor accelerate faster towards it, throwing £30 billion at road building and freezing fuel duty for the ninth year running.

‘This now amounts to a £9 billion tax give-away, enough to reverse all Conservative benefit cuts of the past eight years.’

2018 Autumn Budget – the business reaction

Business groups have responded to Chancellor Philip Hammond’s Autumn Budget speech.

The Federation of Small Businesses (FSB) has welcomed the measures outlined in the Budget, extolling the £900 million in business rates support for small high street businesses, and praising the two-year freeze of the current VAT threshold.

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Mike Cherry, FSB National Chairman, stated: ‘This is the most small-business-friendly Budget that this Chancellor has delivered. He has listened to our requests across many areas of tax and public policy, putting him firmly on the side of Britain’s small businesses.’

Additionally, the Confederation of British Industry (CBI) commended the Chancellor for his ‘rock-solid’ Budget that delivered ‘more treats than tricks’.

Commenting on the Budget, Carolyn Fairbairn, Director General of the CBI, said: ‘It recognises the enormous contribution enterprise has made to balancing the UK’s books through jobs, pay and tax, and responds to many of the recommendations that firms have made.’

Meanwhile, the British Chambers of Commerce (BCC) stated that the Chancellor has listened to firms’ concerns by ‘delivering a Budget that supports investment and growth’.

Commenting on the speech, Dr Adam Marshall, Director General of the BCC, said: ‘Philip Hammond has sent important and positive signals to businesses across the UK, many of whom have been wavering on investment and hiring.’

However, the Institute of Directors (IoD) said that the Chancellor delivered a Budget that ‘pulled its punches’. Stephen Martin, Director General of the IoD, said: ‘Going into this Budget, IoD members urged the Chancellor to prioritise help for Brexit preparations. It is not enough simply to announce a potential ‘no deal Brexit Budget’- businesses need to get ready now.’

2018 Autumn Budget – the economic picture

Within his Autumn Budget speech, Chancellor Philip Hammond reported that ‘the era of austerity is finally coming to an end’, unveiling higher growth forecasts and lower-than-anticipated borrowing.

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In its report prepared for the Budget, the Office for Budget Responsibility (OBR) revised its growth forecasts for the UK economy up from 1.3% to 1.6% for 2019; to 1.4% in 2020 and 2021; to 1.5% in 2022; and to 1.6% in 2023.

Meanwhile, government borrowing in 2018 is set to be £11.6 billion lower than originally forecast at this year’s Spring Statement, the OBR revealed.

However, Mr Hammond also recently warned that an emergency Budget will be required if the government fails to negotiate a Brexit deal with the EU.

The Chancellor stated that, in the event of no deal, he will be required to alter his economic plan, and has therefore chosen to ‘hold back some fiscal headroom’.

All spending plans outlined in the Budget will take effect, ‘regardless of Brexit’, Downing Street confirmed.

2018 Autumn Budget – what to expect

Chancellor Philip Hammond will deliver his 2018 Autumn Budget speech today at 3:30pm. We will be keeping you up to date on the key Budget announcements, and will be supplying a full summary, which will appear on our site tomorrow morning.

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The 2018 Budget is the last before the UK leaves the EU, and many expect the Chancellor to outline how he intends to prepare the UK economy for Brexit.

Speculation is rife that the Chancellor will freeze income tax thresholds, despite the Conservative Party’s manifesto pledge to increase the personal allowance to £12,500 and the higher rate income tax threshold to £50,000 by 2020. Abandoning the plans could result in many taxpayers losing out on significant savings.

Meanwhile, experts have speculated that Mr Hammond could overhaul the tax rules that rule the self-employed out of paying national insurance contributions (NICs). The Treasury reportedly believes that a third of people claiming to be self-employed as part of a ‘personal service company’ are actually employees, and should therefore pay more tax. It has dubbed such individuals as the ‘synthetic self-employed’.

The government may seek to reform the IR35 rules in order to demand that firms using personal service companies take legal responsibility for making sure that ‘off-payroll’ contractors abide by stringent regulations.

As previously announced by Prime Minister Theresa May, the Chancellor is set to freeze fuel duty for the ninth consecutive year. However, many believe that duty on alcohol may rise in the Budget, as this typically increases in line with the Retail Prices Index (RPI), which presently stands at 3.3%.

A year of shared leave for new parents to start by April 2015

29 Nov 2013

The Government has proposed to introduce shared leave for parents after the birth of their child.

Current maternity leave is 52 weeks, but from April it will be possible to split this leave – excluding the first two weeks of the mother’s recovery – between parents. Deputy Prime Minister Nick Clegg claims that this set up will give mothers the chance to continue their careers and allow fathers to be ‘more hands-on parents’. Anybody deciding to take the total annual leave of six months will retain their legal rights to return to their job.

However the Institute of Directors have labelled these new rights as a ‘nightmare’ that would ‘heap yet more burdens on struggling employers.’ Alexander Ehmann, deputy director of policy said that ‘The proposed system is considerably more complex and unwieldy than the current laws and employers will – once again – have to absorb the cost of adapting and implementing this new system.’

In the hope of dispelling fears for small businesses, employers will have to agree the proposed pattern of time off before an agreement is made and they continue to retain the right to demand it be taken in one continuous block.

Frances O’Grady, the TUC general secretary said that the step was ‘welcome’ but would be unaffordable ‘unless it is backed up with better pay’.