Banking Crisis And UK 2023 Budget Summary, What You Need To Know As Another US Bank Fails

Banking Crisis And UK 2023 Budget Summary, What You Need To Know As Another US Bank Fails

Banking Crisis And UK 2023 Budget Summary, What You Need To Know

Another US bank bailed while Paris burns.

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As expected, Jeremy Hunt’s first budget did little to excite investors and the property industry.

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With the country still recovering from the events of the last two years and massive Government debt there was not much money to give away in this budget. Chancellors usually save that for a pre-election budget!

Jeremy Hunt highlighted concerns about the banking sector, following the collapse of America’s Silicon Valley Bank, Signature Bank and a further bailout by the US banks, but reassured us that the UK banking industry is safe.

European Central Bank supervisors see no contagion for euro zone banks from recent sector turmoil, a source said on Friday, after U.S. lenders threw First Republic Bank a $30 billion lifeline and tapped record amounts from the Federal Reserve.

Large U.S. banks on Thursday were forced to rescue the San Francisco-based lender, which was caught up in market volatility triggered by the collapse of two other mid-size U.S. banks.

This week, Credit Suisse went ‘cap in hand’ to the central for an emergency bank loan of up to $54 billion to shore up its liquidity – banking terms for having no money!

The National Residential Landlords Association described it as missed opportunity to tackle the supply crisis in the private rented sector and the Royal Institution of Chartered Surveyors (RICS) said it was disappointed by the lack of housing ambition in the budget.

However, the Chancellor did announce 12 new Investment Zones across the UK and relaxed Immigration Rules to help the construction industry cope with staff shortages.

Most of us will be paying more tax  in the coming years due to the ‘fiscal drag’ caused by tax allowances not rising in line with inflation each year.

Here’s a summary of the main points, but you can read the full budget speech at the commons library

Budget main points

  • Energy cap limiting typical household energy bills to £2,500 a year extended to June
  • £200m to bring energy charges for prepayment meters into line with prices for customers paying by direct debit – affects 4m households
  • Lifetime Allowance – the cap on amount workers can accumulate in pensions savings over their lifetime before having to pay extra tax (currently £1.07m) to be abolished
  • Tax-free yearly allowance for pension pot to rise from £40,000 to £60,000
  • The 5p cut to fuel duty on petrol and diesel, due to end in April, kept for another year
  • Office for Budget Responsibility (OBR) predicts the UK will avoid recession in 2023, but the economy will shrink by 0.2%? Economy shrinking but not in recession!
  • Growth of 1.8% predicted for next year, with 2.5% in 2025 and 2.1% in 2026
  • UK’s inflation rate predicted to fall to 2.9% by the end of this year, down from 10.7% in the last three months of 2022
  • Underlying debt forecast to be 92.4% of GDP this year, rising to 93.7% in 2024
  • Corporation tax, paid by businesses on taxable profits over £250,000, confirmed to increase from 19% to 25% making the UK a less competitive place to invest
  • Companies with profits between £50,000 and £250,000 to pay between 19% and 25%
  • Companies able to deduct investment in new machinery and technology to lower their taxable profits
  • Tax breaks and other benefits for 12 new Investment Zones across the UK, funded by £80m each over the next five years
  • £200m this year to help local councils in England repair potholes
  • £900m for new super computer facility, to help UK’s AI industry
  • 30 hours of free childcare for working parents in England expanded to cover one and two-year-olds, to be rolled out in stages from April 2024
  • A £600 “incentive payments” for those becoming childminders, and relaxed rules in England to let childminders look after more children
  • New fitness-to-work testing regime to qualify for health-related benefits
  • New voluntary employment scheme for disabled people in England and Wales, called Universal Support
  • Tougher requirements to look for work and increased job support for lead child carers on universal credit
  • £63m for programmes to encourage retirees over 50 back to work, “returnerships” and skills boot camps
  • Immigration rules to be relaxed for five roles in construction sector, to ease labour shortages

Source: BBC News

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