Spring Statement

I watched yesterday’s Spring Statement (not an emergency budget mind!) and noted there were no specific new tax rises announced but I think this will be a case of when and not if new tax rises are announced.

As I stated in my last missive, the tax rises have led where I expected with the OBR reducing the GDP growth forecast by 50% from 2% to 1%. This simply means the rate the economy is growing by is forecast to reduce by 50% which means the tax take expected in the last budget may not materialise. The headline rate of inflation is also forecast to be higher which means that interest rate cuts will likely be delayed further.

The tax rises for employers kick in from 6 April 2025 so it is expected many smaller and mid size employers will face the choice of laying off staff or closing their doors.

It has also been noted that the effect of Angela Rayners cherished employment rules have not been factored into the forecasts which are expected to burden employers with at least an extra £5 billion of costs. The chancellor is believed to have left herself very little room for manoeuvre and so it seems inevitable that she will have to return at a later point to raise taxes further as the market has already started turning against her. Borrowing rates are already higher than under Liz Truss.

Fortunately client portfolios are diversified around the world so not completely linked to the fortunes of the UK economy. I suspect the UK stock market will not be particularly impacted but as a country we will certainly feel the effects in our pockets.

At some point a new Government will need to balance the books which will make some of the supposed cuts announced recently look like a drop in the ocean.

Thoughts on market events

The markets responded positively to the news of Trump’s election last year although the shine has waned over the last month or so, mainly due to concerns about the so called Trade War and tariffs. If these all go ahead as planned I would expect some disruption in markets but they will find equilibrium eventually so I am not too concerned about recent events. Markets are broadly back to where they were just after Trump came in.

The Ukraine war continues to bubble away in the background and I do not think it is having a major impact on markets thus far.

Having completed my annual due diligence on all my investment management partners these last few weeks, there are no major warning signs to report and global economies continue to perform in line with expectations and long term averages.

Some commentators suggested the US would fall into recession due to the tariffs and the FED reduced the expected US GDP figures from 2.25% to 1.75% which trigged some of the recent volatility. I have to say it seems unlikely to me that the US will be going into recession but I would not be surprised if the UK does.

State Pension Check before 5 April

You may have heard Martin Lewis on the TV talking about State Pensions recently as there is a limited window before 5 April to check your State Pension forecast and fill in gaps going back to 2006. I would urge you to check your forecast on the HMRC Government Gateway and challenge any gaps you notice with them and look into paying extra contributions to fill these in. Please remember to send me a copy of your latest forecast for my file!

Tax Year end

I would remind you that you can realise up to £3,000 of capital gains each tax year so it is worth checking your investments to see if you have any scope to use this allowance. Pensions can also be topped up.

I would also remind you to make sure you are using your £20,000 ISA allowances and not leaving money in taxable cash accounts where they can be moved to tax free ISAs.

With markets falling in recent weeks, it is also timely to top up Stocks and Shares ISAs if you can commit funds for at least 5 years.

Office Move

I’m pleased to announce I am moving to a new larger office here at Worth Corner where I can host future meetings in person in my own space, so please do feel free to come into the office to see me. I am doing exhaustive research on good coffee machines and investing in a large TV so we can clearly display your cashflows and go through these in detail. There is no change in address as all my post is held securely at reception.

As always, please do get in touch if you have any questions or concerns.