but they are important events . Not so much for hearing about personal tax changes , alcohol duties or car tax , but much more for the overall spending plans of the government .
In the last few years , except for COVID emergency measures , they have been less interesting . However , I sense the Budget on 30 October may be more newsworthy . Of course it is possible we will have had all the measures leaked before then so we are “ let down gently ”. Either way , overall I think this Budget is much more important than any we have seen for a long time .
In the run up to the election , my view was that there was not an awful lot either party could do on economic policy post-election . That view does not seem to be correct now . The government has committed to spending plans that need to be funded . That funding looks like it is going to come from an increased tax burden on the wealthier element of society . In principle that is fine , but there are clear issues with that . Furthermore , it does look like company taxation and National Insurance contributions are on the agenda , along with changing employment legislation .
The government is , encouragingly , keen on growing the economy , but their spending plans are not growth orientated and higher taxes do not lead to growth , they are more likely to reduce it , particularly when they are aimed at corporates and a socio-economic group that typically does generate growth at both a personal and business level , which may become less incentivised or depart to other countries .
Of course , plans can change , and I could be wrong , and does this really matter in the short term ? Well , for UK financial markets , I think it might .
Following the election , I thought the stars had aligned to make the UK equity market attractive for investors again , after a long period of being shunned . It looked good value by international and historic comparison , inflation had collapsed , economic growth was better than expected and the political backdrop was stable . However , some of those positive factors have stalled ; consumer confidence has fallen , the Bank of England seems reticent to cut interest rates and growth is under threat . I now think that concerns over the Budget and the economy may overhang for a while and put off international , domestic , corporate and private equity buyers from investing in the UK .
However , it does still look good value we can find a very large number of companies we want to invest in . It ’ s still attractive , just not as attractive .
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