recovery

Plans for re-starting the economy

It has been a turbulent few months for many of us, with jobs being cut, furloughing schemes, working from home and closure of many businesses (small and large). Last week, Chancellor Rishi Sunak announced a number of measures which are designed to help us along the road to recovery. It is going to take several months (or even longer) and things may never quite be the same – but here are a few of the measures which have been announced:

A cut in VAT on hospitality – restaurants and hotels will see the VAT on their goods reduced from 20% to 5%. For consumers, it is possible that this will mean lower prices but businesses are under no obligation to pass this saving on. They may keep their prices the same and use the VAT saving to try to repair some of the damage caused by their enforced closure over the last few months, or to try to allow for fewer customers as social distancing regulations mean that they can’t seat as many people as before.

A temporary removal of stamp duty on house purchases under £500,000 – if you were planning to move house before March 2021, this may well save you a significant amount of money. Previously, any house sold for more than £125,000 attracted stamp duty (often thousands or tens of thousands of pounds) which the buyer had to pay on top of the purchase price. Until March of next year, the threshold has been increased to £500,000, in an attempt to encourage people to buy and re-energise the housing market.

A bonus paid to employers who retain furloughed employees – if an employer keeps an employee who was furloughed on the payroll until the end of January 2021, they will be eligible for a one-off £1000 bonus. This is to encourage employers to keep people on and prevent unemployment, even if business doesn’t pick up immediately now that lockdown has been loosened.

There were several schemes announced which are intended to encourage employers to employ 16-24 year olds.

A full run-down of the measures announced is available from the BBC.

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Wednesday, July 15th, 2020 Economy, Jobs No Comments

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Trying to live cheaply

I was interested to read an article on the BBC news website today about the new benefits cap, which was trying to estimate how much money someone needs to be able to live (albeit cheaply). As well as some examples of how people can save a bit of money with cheaper options, it was interesting to me to see things that I wouldn’t necessarily have considered when trying to work out my weekly spend.

For example, they say that the average family spends £9.50 a week on furniture. Now, obviously, most people don’t buy a new piece of furniture each week, and I can’t remember the last time I did – but it is expensive and you will need to budget for some such purchases over the year. You might think that if you were living on a budget you just wouldn’t buy furniture, but it does wear out and does need to be replaced, even if it is replaced with a cheaper, second-hand equivalent.

Also clothing – not something I spend money on regularly, but if you have a job interview you will need a suit – and you’ll have to save for many weeks at a couple of pounds a week to afford it. Things like socks will wear out, shirts will get damaged – if every penny counts, it will be difficult to get replacements, even if you shop in budget shops.

Anyway, check out the link above to read the article in more detail. You might spot somewhere that you could economise!

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Friday, April 26th, 2013 Consumer Goods, Economy, Jobs No Comments

Rocky road to financial recovery

Although the UK entered recession as long ago as the second half of 2008 and officially exited recession at the end of 2009, a full recovery still seems a long way off. This week was one of mixed messages – some good and some bad.

First came the bad news that the Consumer Price Index (CPI) had increased from 4% to 4.5% in April. The CPI is used to measure inflation in the UK and to compare it with the government’s target of 2%. A low level of inflation (like 2%) is a sign of a healthy economy, but higher rates usually mean that the costs of goods and services are increasing faster than workers’ wages, leading to a lower standard of living. For those of us already finding it hard to make ends meet, this is obviously bad news.

On the flip side, however, there was news that unemployment fell in the first quarter of this year. The decrease was only slight, to 7.7% from 7.8% the previous quarter, but it is a promising sign – as is the fact that the number of people in employment has increased to 29.24 million, just short of the pre-recession peak of 29.57 million.

What does all of this mean? Well unfortunately, these numbers are just a small part of the complex system that makes up the British economy and predicting what will happen next is astonishingly difficult – as no doubt you’ve noticed in the past few years. However, it seems that the economy is continuing on its long, slow recovery from the greatest recession in living memory. The recovery appears to be fragile – which is one of the reasons that the Bank of England has left its base rate at 0.5% for the 26th month in a row. You know what they say – slow and steady wins the race!

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Saturday, May 21st, 2011 Economy No Comments

Holidaying in an overdrawn country

I’m in Greece at the moment, a country which has been suffering recently from severe economic problems. Over the past decade the government has taken advantage of the security of being part of the Euro and borrowed more than the country’s total annual revenue. The downturn lead to less advantageous borrowing rates, leaving the country with an increasingly difficult task to repay the loans (sounds like the “sub-prime” crisis but for countries rather than homeowners, doesn’t it?). Cuts in public sector pay and benefits have lead to protests and riots. So does this affect you if you’re visiting the country?

My experience is no. The weakened Euro has helped increase the number of visitors to Greece and its islands, where I am right now. Hotels and restaurants therefore are not short of customers and although I have seen a number of closed establishments, such businesses can fail even in boom times. Prices for meals and drinks remain reasonable – no sign of businesses using inflation to combat financial problems. There have also been no effects of any strikes, although if you were to be relying on public transport you may run out of luck (I have had no problem using the buses here, however).

The holiday resorts, bars, shops and tourist attractions have been as busy as ever and it doesn’t appear that the larger economic problems of the country are having an impact on the day-to-day experiences of a tourist enjoying the hospitality of a popular holiday destination.

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Monday, July 5th, 2010 Economy, Foreign Currency No Comments

Coalition pledges to affect tax

So we’ve got a new, coalition government and they have published the details of the agreements which were reached between the Conservative and Liberal Democrat parties. As you can see in the linked article, campaign pledges from both parties were included in the agreement, reflecting the compromises necessary.

They have promised that a new budget will be announced within 50 days, which will include changes to PAYE taking effect from April 2011. These changes will include increasing the income tax personal allowance to reduce taxes for low and middle earners (although not immediately the full increase to £10,000 the Lib Dems wanted), but the employee National Insurance threshold changes the Conservatives put in their manifesto will not be included. However Labour’s planned increase in employer National Insurance will not go ahead, pleasing Conservative supporters.

Full details will not be available until the promised emergency budget, but I promise to make available as soon as possible any relevant changes to The Salary Calculator!

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