Marketing Newscast

(Edited 30 October 2024)

Today is Budget Day. Chancellor Rachel Reeves will get to her feet to make her maiden Budget speech in the House of Commons at around 12.30pm today. She is aiming to raise £40bn in tax hikes and spending cuts. Having pledged not to raise Income tax, National Insurance (NI) or VAT, there has been considerable speculation – and several leaks - as to what taxes she will raise. Mooted hikes include increasing Capital Gains Tax (CGT) as high as 39%; scrapping various Inheritance Tax exemptions; changing the system of tax relief on pension contributions; putting a £500,000 limit on tax-free ISAs; ending Stamp Duty threshold reductions introduced by former Chancellor Jeremy Hunt; ending the non-dom scheme; abolishing the 25% Council Tax discount for people living alone; and increasing fuel and alcohol duty. It has also been widely reported that she will raise employer NI by up to 2% despite pre-election pledges; apparently employers are not “working people” and therefore do not count in Labour’s promises to the electorate. She is also likely to bring in a stealth income tax rise by not increasing the tax-free £12,570 personal allowance that anyone earning less than a £100,000 annual salary receives. [1] Reeves’ is also expected to levy NI on employers’ pension contributions, but exempt the public sector from that. What we do know is that she will raise the National Living Wage (NLW) by more than triple the current 1.7% rate of inflation, from £11.44 to £12.10. It has also been suggested she will match the minimum wage rate for those aged between 18 and 20 to that of older workers, meaning a wage rise of nearly 8% for younger workers. We also know the Winter Fuel Allowance will be scrapped for pensioners not in receipt of Pension Credit; that the £2 cap on bus fares will be raised to £3; VAT will be levied on school fees; and the energy profits levy on oil and gas producers will rise from 35% to 38% from Friday this week, and remain in place until 31^st March 2030. Otherwise, today we will find out what has been either pure speculation (or deliberate leaks in that time-honoured way politicians have to ‘test the water’ of public opinion), and what is fact. We will also discover which of the numerous warnings from individuals, CEOs, founders, businesses, trade bodies and think-tanks as to which tax hikes are likely to prove disastrous, deliver growth, or bring in revenue or not, have been heeded, and which have fallen on deaf ears.

Some of what Reeves will say has already been briefed out. She is going to talk of how the Labour Party “rebuilt our country out of the rubble of the Second World War;” in 1964 “with the white heat of technology;” in 1997 when “the Labour Party rebuilt our schools and hospitals;” before saying: “Today, it falls to this Labour Party…to rebuild Britain once again.” She will also pledge to create an economy “that is growing, creating wealth and opportunity for all” but that “there are no shortcuts” to make this journey an easy one.

Polling by Savanta suggests business leaders are very worried about today’s Budget. 25% said they were “concerned” and 22% said they felt “apprehensive”.  Only one in five said they felt “positive”.  about today’s statement, according to Savanta. Leaders of small businesses were most worried - almost two thirds said they felt “nervous, concerned or apprehensive”.

Meanwhile, UK executives have been “racing to sell shares” at a record rate as fears mount that Chancellor Rachel Reeves will raise Capital Gains tax (CGT) at today’s Budget, according to Will Rhind, founder and CEO of Graniteshares. Last week, directors sold £29.8m of their companies’ shares, while only buying £4.1m, leaving a net £25.7m of stocks sold, according to Graniteshares’ data. Over the last month, investors sold £163.4m worth of shares, while only buying back £48.5m, a net sale of £114.9m. Over the last quarter, net shares sold by UK directors has risen to £515.6m, up from just £95.1m in the first quarter of 2024. “Executives are no different from other investors, who are increasingly losing confidence in the UK market,” Nick Saunders, CEO of stock trading platform Webull UK, told City AM. “A lower CGT rate represents the increased risk of equity investments; if the rate increases, the incentive to invest in equities rather than bank accounts diminishes.” Saunders also noted that any increase in CGT likely to diminish the proportion of Brits owning UK shares, a figure that has already fallen to a record low of just 10%, as overseas investors, who own 58% of the FTSE 100, will not suffer the same penalty.

There will be a full Budget roundup in tomorrow’s Daily Business News.  

UK mortgage approvals hit 65,647 in September, the highest monthly total since August 2022, according to data released by the Bank of England yesterday.

Insolvencies at UK fashion manufacturers have risen by nearly a quarter in the past year, according to international tax and advisory firm Forvis Mazars. Over 100 companies went bust in the 12 months to July 2024, up from 86 companies in the previous year, a situation the firm attributes to cost and supply pressures since Russia’s invasion of Ukraine in February 2022, and the pro-Palestine Houthi rebellion in the Red Sea. Additionally, as Rebecca Dacre, Partner at Forvis Mazars, said: “In a cost-of-living crisis many consumers simply do not have the disposable income to spend on luxury clothing”.

More than 1,000 Ford office workers will go on strike for 24 hours on Wednesday in a long-running dispute over pay and contract changes. Trade union Unite says Ford is refusing to offer administrative workers a permanent pay increase, instead offering a one-off payment for 2024 before imposing 100% performance related pay from 2025 for all staff. Ford is also attempting to change its long-standing sick pay policy and collective bargaining agreements, Unite added. "Despite its huge wealth, Ford has launched a direct attack on its office workers' pay and terms and conditions. The only reason for this is corporate greed, Unite general secretary Sharon Graham said. "The company's appalling treatment of our members has simply made them more determined to fight against these cruel and unnecessary changes and for a fair pay rise. They have Unite's total and unflinching support as they strike for a better deal."

Santander is cutting 1,425 jobs across its UK business this year to cut costs and as it increases automation of more of its operations, the Spanish bank’s CEO Hector Grisi confirmed in a press conference held yesterday. The job cuts are largely completed and expected to finish by the end of this year.

JD Sports has sold its majority stake in Bolton-based Total Swimming Group, which was founded by former Olympic swimmers Steve Parry, Rebecca Adlington and Adrian Turner.  JD Sports has held a 60% stake in the firm, which was set up to make swimming more accessible, since 2022. The business includes Swim!, the first multi-site operator of dedicated children’s learn to swim centres in the UK.

Foxtons has bought two commuter town estate agents in the Reading and Watford areas - Haslams and Imagine respectively - for £12.6m. The towns are new areas for the London-listed estate agency.

Volkswagen has reported a 60% fall in net profit for its third quarter. Net profit came in a £1.57bn, as vehicle sales slid 8% to 2.1m. The firm also said expects to deliver 9m vehicles in 2024, down on last year's 9.24m. VW currently employs around 130,000 people in Germany, and it was reported here yesterday that it is shuttering 3 of its factories in the country after being hit by rising costs and lower demand, especially in China. As well as potentially laying off tens of thousands of employees, VW also wants to cut pay by 10% for those who remain. "Volkswagen brand reported an operating margin of only 2% after nine months. This highlights the urgent need for significant cost reductions and efficiency gains," COO Arno Antlitz said.

McDonald’s has posted a second larger than expected drop in sales, the consequence of slowing sales in mostly France and the UK, but also elsewhere in Europe and China.  Global sales at McDonald’s restaurants fell 1.5% between July and September, the biggest decline in four years, and more than twice the dip forecast by analysts. It follows a 1% drop in sales between April to June, and marks the first two consecutive quarters of contraction since global Covid lockdowns in 2020. Although the US saw a 0.3% rise in sales, international markets were down by 2.1%.

And finally… Starbucks has told its US office workers to be in the office three days a week or risk losing their jobs, according to the Bloomberg which has seen a warning internal message sent to employees.  

[1] The Personal Allowance goes down by £1 for every £2 earned over £100,000. It reaches zero if your income is £125,140 or above.