Was that a good Budget – and is austerity really over?

The latest budget before Brexit brought some unexpected cash for the government, leading to a relatively unspectacular but quick spending spree. The chancellor, Rishi Sunak, brought forward the increase in the basic and higher rate tax thresholds, which was seen as a tax cut for the rich. However, this move was not a huge surprise given the economic uncertainty surrounding Brexit. The budget was criticized for lacking concrete measures for pensions or savings, and the media coverage was muted compared to past budgets. Despite the late hour, Sunak's decision to spend the unexpected cash was seen as a smart move by some, allowing him to address various issues before the upcoming Brexit negotiations. Overall, the budget did not signal an end to austerity as promised, but rather a brief respite from fiscal discipline.

The UK Prime Minister's budget speech was aimed at boosting confidence in the economy amid Brexit uncertainty. Instead of focusing on economic figures, the Prime Minister announced early tax cuts, which were well-received by the public. However, the promise of ending austerity and increasing funding for certain sectors, like the NHS, raised questions about where the money would come from and whether it was a sustainable move. The speech also saw a shift in focus from the housing market to crime, as concerns about rising crime rates grew. Some experts believe that the budget was an attempt to give a pre-Brexit boost by suggesting that the UK economy was doing well and that more money would be available post-Brexit. However, the ongoing challenges with universal credit and other issues cast doubt on the sustainability of such claims.

While the austerity measures have officially not ended, the situation on the ground paints a different picture. Many people, particularly those in poverty, continue to struggle despite Universal Credit and other welfare reforms. The debate over who has been hit hardest by austerity, the rich or the poor, is complex and goes beyond just looking at statistics. In real life, the experiences of individuals do not always align with the charts and figures. The argument that austerity has disproportionately affected the poor is commonly heard, but it is essential to consider both facts and people's experiences. The public services, which have been asked to trim the fat during austerity, continue to argue for more funding. The government's decision to cut taxes and raise thresholds has resulted in more money staying with the people rather than going to the government. The future of austerity remains uncertain, and the impact on households is a crucial consideration. The recently published Treasury document, "Impacts on Households," provides a helpful guide to understanding how income is distributed and how different households contribute and benefit from the system.

The report reveals that on average, households in the lowest income decile will receive more than £4 in public spending for every £1 in tax they pay, while those in the highest income decile will contribute more than £5 in tax for every £1 they receive in public spending. This disparity is significant and highlights the redistributive nature of the tax and benefits system. The report also shows that since 2007, the lowest 10th percentile of earners have seen their real disposable income rise faster than both the median and the 90th percentile. The report also illustrates the relationship between taxes paid and benefits received, revealing that those at the lower end of the income scale receive more in benefits than they pay in taxes, while those at the upper end pay significantly more in taxes than they receive in benefits. The report provides valuable insight into the impact of government spending and taxation on different income groups and helps put the recent tax cut in context.

The recent budget move by the Chancellor, Rishi Sunak, aimed at treating public sector workers fairly and giving them something back, makes more sense when considering the context of the current economic climate. This is especially true since the shadow chancellor, John McDonald, has indicated he would not reverse the decision despite his plans for a new 45p tax rate above £80,000. Furthermore, the budget included an injection of £2.7 billion back into Universal Credit, which is crucial for the policy's success. The budget also featured several labor-leaning policies, such as increasing the NHS budget and cutting business rates for small retailers, leaving the opposition struggling to find criticisms. The budget's measures, including a digital services tax, were designed to address the issue of big companies not paying their fair share in taxes. Overall, the budget showed a focus on fairness and addressing the needs of various sectors, making it a significant step towards economic recovery.

The UK's economic outlook, including interest rates, is highly dependent on the nature of Brexit and its transition. While the Bank of England kept rates at 0.75% this week, they warned that this decision was based on a smooth Brexit transition. If Brexit hits the UK hard, rates could be cut instead of raised. The Monetary Policy Committee's decision on the appropriate path of monetary policy will depend on the balance of effects on demand, supply, and the exchange rate. Additionally, the RPI inflation rate will still apply to certain areas like road tax and student loans, despite the government's plans to switch to CPI and CPIH for other areas. The ISA allowance remains at £20,000, and premium bonds can now be invested at a minimum of £25. Overall, the budget and the Bank of England's report highlight the uncertainty surrounding the UK's economic future.

The Bank of England has signaled that their monetary policy response to Brexit is not guaranteed and could result in higher interest rates to defend the pound and stabilize the economy in the event of a no-deal scenario. Despite market expectations of chaos and uncertainty, a smooth transition or a deal offering more permanence could lead to interest rate increases due to an improving economic outlook. The central bank anticipates a gradual rise in rates, reaching 1.5% over the next three years, which would help bring inflation back to target and maintain low unemployment.

As interest rates are expected to rise, individuals should consider securing their personal finances by remortgaging their homes to longer-term fixed rates and building up savings as a safety net. Mortgage borrowing has been cheap due to low base rates, but this could change, leaving some homeowners unprepared for higher interest rates. Additionally, easy access savings rates have been neglected in recent years, but with the launch of competitive rates from challenger banks, it's important for savers to take advantage of these opportunities and secure their funds. While savings rates may not be high, having a safety net is crucial in preparing for potential debt and financial instability.

Building societies sometimes offer attractive savings deals as a publicity stunt, only to pull them back shortly after due to high demand. This was recently seen with Nottingham Building Society's limited-time 9% easy access account. Building societies operate by bringing in savers' cash and lending it out in the form of mortgages or personal loans. They don't want to take in too much cash as it becomes expensive to hold due to the need to pay interest on it. When they reach their target amount, they close the offer. In this case, Nottingham Building Society likely knew the offer would be popular and quickly pulled it, using the opportunity to promote their new savings brand, Beehive Money. However, such actions can leave potential customers frustrated and may negatively impact the building society's reputation. Despite this, the demand for savings accounts remains strong, even with low savings rates, as people seek a home for their cash.

Goldman Sachs' marketing stunt with Marcus Bank, despite appearing as self-promotion, showcases the deep financial resources available to larger financial institutions compared to smaller building societies. Another key point is Monzo's decision to issue their new savings account through Investec, highlighting the ease of launching savings rates compared to current accounts. In the world of parking, Basildon residents are fighting back against unfair parking charges, aligning with This is Money's campaign for fairer parking processes. The campaign aims to make the appeal process more balanced, preventing hiked charges for unsuccessful appeals. Additionally, concerns surround the selling of DVLA's private data.

There are concerns about a private parking firm in Basildon, Smart Parking, and the large number of parking charges being issued due to supposedly incorrect or incomplete registration plate inputs. With over 3,500 people joining a Facebook group in just six weeks, it raises questions about the reliability of the machines and the potential for systemic flaws. Frustrations are compounded by the fact that some drivers are unable to find parking spaces and are forced to leave before their allotted time, resulting in charges. The situation is particularly problematic for those who need to visit the nearby council offices or Westgate Shoppers Centre for extended periods. The lack of transparency and the involvement of multiple middlemen, including a company based in Jersey, have added to the public's frustration. The issue highlights the potential negative impact of private parking companies on the high street and the need for more accountability and efficient systems.

There are issues with private parking companies fining drivers for parking infringements, even when the infringements may not be clear-cut. These fines can be disputed, but the process can be frustrating and costly for drivers. Some companies may even try to charge drivers for the cost of issuing the fine notice. However, there are examples of fair parking practices, such as the one in Tring where drivers can park for free for an hour by entering their number plate. It's important for towns and cities to have effective parking monitoring to ensure fairness and prevent exploitation, while also allowing for free or discounted parking for short-term visitors. The campaign mentioned in the discussion aims to raise awareness and encourage drivers to take a stance against unfair parking fines.