The Budget Highlights – 2021

The 12 months between the March 2020 budget and the one delivered on 3rd March 2021 has been, to coin a popular phrase – “unprecedented.”  We have seen 3 lockdowns, the economy shrink by 9.9%, Coronavirus support measures costing upwards of £280 billion and a tragic death toll within the UK from a pandemic we simply never saw coming.

As a result, Government borrowing – the budget deficit – is expected to rise from a forecasted £55 billion to about £355 billion by the end of 2020-21. Meanwhile, national debt is already approaching 100 per cent of GDP at £2.1 trillion and could rise to 120 per cent of GDP during the first half of the decade according to the Office for Budget Responsibility (OBR).

The widely respected Institute for Fiscal Studies (IFS) warned late last year that around £40 billion of tax rises will be needed by the middle of the decade to keep borrowing down to £80 billion a year and debt down to 100 per cent of GDP, prompting intense speculation that they could come as soon as this Budget.

With the Conservatives having committed in their 2019 General Election Manifesto not to raise the rates of Income Tax, National Insurance or VAT, there was much speculation about where and how the Chancellor would start to recoup these huge losses and over what period of time.

Thankfully, the UK is feeling the optimistic effects of a robust vaccination programme which at the time of writing has seen more than 20 million people vaccinated against Coronavirus, with set dates in the diary for the pathway out of lockdown.

So what does this new Budget mean for you and your personal finances?  Read more in our highlights document and as always, if you have any questions about your financial goals, investments or portfolio please do get in touch.