What does the tax-cutting mini-Budget mean for you and the UK?

This is Money Podcast

This is Money

Business News, Business, Investing, News

4.1 • 650 Ratings

🗓️ 23 September 2022

⏱️ 49 minutes

🔗️ Recording | iTunes | RSS

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Summary

Britain's new Chancellor Kwasi Kwarteng delivered a blistering mini-Budget this week that was anything that small.

A wave of tax cuts were unleashed. Some had been heavily trailed, such as spiking the National Insurance hike and a stamp duty reduction, but there were also two rabbits out of the hat: a cut in basic rate income tax to 19p from April and abolishing the 45p income tax rate too.

Those tax cuts joined a wave of spending commitments, most notably the huge energy price guarantee bailout for Britain's households and businesses.

Paul Johnson, of the IFS, said: 'Mr Kwarteng is not just gambling on a new strategy, he is betting the house.'

On this week's podcast, Georgie Frost, Lee Boyce and Simon Lambert discuss what the going for growth mini-Budget means for people, how much they may save in tax, and whether it will work or cause the UK economy even more problems down the line.

One thing was clear in the aftermath, markets didn't like the break from the orthodoxy that they saw: the pound tumbled below $1.10 and UK gilt yields jumped.

But how much does that have to do with the mini-Budget and how much does it have to do with the Bank of England's rate decision that delivered a bumper rise of 0.5 percentage points, which was still considered small next to the US Federal Reserve's 0.75 percentage point bazooka?

And finally, we've heard lots of the glass half full verdicts on our current economic situation but what is the glass half full one? Simon has a crack.

Transcript

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0:00.0	Welcome to This Is Money podcast. I'm Georgie Frost. And joining me and editor Simon Lambert today is Deputy Editor Leiboyce. And coming off, we got the least mini of budgets imaginable this week. Tax cuts and new turns galore, growth being the name of the game for this new era of Conservative leadership. But with rates being raised by central banks here and across the pond,
0:23.6	exactly to slow growth and bring down rising prices,
0:27.1	who's right?
0:28.3	Don't forget your step today with all the latest, breaking money news.
0:30.8	Just go to this ismoney.co.uk or download the app.
0:35.4	Market updates and conversations around the financial world don't have to be boring.
0:39.7	The Digest and Invest Podcast by E-Toro is a great way to tune into what's happening in a fun and easily digestible format.
0:46.6	Discover the Digest and Invest podcast at E-Toro.com forward slash academy forward-slash podcasts.
0:52.2	But first, Prime Minister Liz Truss and Chancellor Quasi Quarton have been pretty busy since
0:56.8	coming to power a few short weeks ago. A new energy price guarantee kicks in next month and the
1:01.8	national insurance U-turn that we got this week will come in in November. But what else could
1:07.0	possibly be included in this mini budget we wondered? The Prime Minister's made no secret of her belief that cutting taxes and stimulating growth
1:15.2	is the only way out of this economic mess we find ourselves in at the moment.
1:19.6	And we got both sky-high spending pledges and sweeping tax cuts have investors,
1:24.7	economists, and doubtless to the Bank of England, rather spooked. So very briefly,
1:29.7	firstly, if you would, just run down some of the main highlights, the headlines for us,
1:37.3	and we will drill into them in a little bit more detail later on. But just what did we get,
1:42.7	Lee, go on, tease it up for us. Well, I'll tell you what,
1:45.3	as you say, we've got anything but a mini budget. I mean, what a way to bill it when, in fact,
1:50.2	it was the biggest tax cutting budgets since 1972. That doesn't feel like such a mini budget to me.
1:56.2	I mean, it's, you think mini budget, I think of a little mouse scuttling around, not like a lion roaring
2:01.2	with all sorts of cuts and things going on. I mean, it was absolutely bonkers. I think we've just
	...

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