Mini-Budget: Personal Finance Experts React

Following the Chancellor Kwasi Kwarteng’s mini-budget, here are some comments from personal finance experts.

Andrew Megson, executive chairman of My Pension Expert, said: “The government has been undeniably bold in this ‘mini budget’ – much to the relief of many Britons. Indeed, a reversal of the National Insurance hike and income tax cuts will in the short term, boost the amount of pay people in work take home each month. Greater support for businesses is also welcome. 
 
“Yet, pension policy has largely gone unmentioned. Perhaps not surprising, particularly as the UK’s pension minister was only appointed on Wednesday. However, it is vital that the new-look DWP hit the ground running and address the most pressing issues facing pension planners.
 
“The greatest of which will be bringing inflation under control. Until it drops notably, people’s savings are losing value in real-terms. And this has driven almost one in ten (7%) of adults aged 40 and over to ‘unretire’ in 2022, according to My Pension Expert’s research. Confirming the reinstating of the triple lock would have provided some reassurance here. 
 
“Fast-tracking the long-awaited – and frequently delayed – pension dashboards programme should also be a priority. It would give pension planners greater insight into and control over their retirement savings. Moreover, the Government must commit to working with the pension sector to champion the role of education and improve access to independent financial advice. Doing so will ultimately enable savers to develop a strong retirement plan, tailored to their specific needs. Let’s hope there is more to come in November’s Autumn Budget.”

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Mohsin Rashid, Co-founder, ZIPZERO, said “The Chancellor’s mini-budget confirms some essential support for businesses, which like consumers, are facing massive hikes in their energy bills.

“However, this new administration has made bold claims about prioritising the growth of the economy. Enhancing consumer spending power is integral to achieving this. Yet, it seems that the government fundamentally misunderstands whom the cost-of-living crisis is hitting hardest.

“Allowing bankers to receive greater bonuses, with incalculable rises to incomes on top of six figures salaries, while providing only 63p a month more to the lowest earners seems invariably at odds with their strategy. A more tactful response would see tax support for the lowest earners – far more likely to re-enter the economy than to bolster individual savings.

“I welcome the support for businesses but, with seemingly no action from the government, they must take initiative and pass this onto consumers themselves. This does not have to come at an additional cost either. Businesses are currently spending a collective £27 billion a year on digital advertising to Big Tech. Rethinking their marketing strategy and adopting novel direct-to-consumer platforms will allow businesses to redistribute much-needed cash back to consumers, while still achieving their goals.”

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Ion Fratiloiu, Chief Commercial Officer at Channel Capital, said: “Small businesses are the backbone of this economy, and yet for too long now, the deck has been stacked against them, to the point where the cost of doing business is proving fatal for many. Given the severity of the economic forces at play, it is perhaps unsurprising that a bolder stance has been taken in today’s mini-budget towards providing some immediate relief to businesses and helping then reduce their burden.

“While these measures represent a step in the right direction, a longer-term strategy and wider support will be needed to help SMEs combat the mounting challenges threatening their survival. At a time when business leaders are struggling to absorb the impact of record inflation and soaring energy costs, more needs to be done to address the critical funding gap facing small businesses today”.

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Giles Coghlan, Chief Market Analyst HYCM, said: “The mini-budget comes at a time when the government is trying to balance support for consumers and businesses with measures that might trigger further inflation, whilst also trying to reinvigorate a stagflationary economy.

“For investors, inflation poses the biggest threat to their portfolios, which the Prime Minister’s new emergency energy bills package should somewhat ease in the short-term. However, such a large fiscal package could contribute to elevated prices in the medium to long term that could inflict further damage to an economy and currency that are already on their knees. By cutting VAT, corporation tax and even beer duty, it’s clear that Truss and Kwarteng are committed to encouraging growth and supporting businesses who are struggling to meet the demands of a worsening cost-of-living crisis. Further tax cuts for consumers, in addition, should provide a welcome boost to their spending power as.

“That said, while the effect of these measures is likely to provide a temporary relief for the next few months, investors will be concerned that not enough is being done to power growth and economic resilience for the longer term.”