Day of the Budget

By Luke Dyson

For the week to date we have seen a steady rise for the pound against euro and dollar. This could be in anticipation ahead of the spring Budget or the fact UK bond yields have risen on the basis the Budget is going to be the driving force behind that.

With the Budget being held at 12:30 today, it is typically a low risk event in regards to market movement, however when there have been surprises in the past the market have had some devastating drops for sterling.

So what is the Budget and how will this affect where we are at the moment?

On a yearly basis the Chancellor makes a Budget statement outlining higher or lower tax rates, spending on health , schools, police and other public sector departments. Which, once announced, will be responded to by Sir Keir Starmer and debated in the Commons, resulting in the Budget proposals being turned into law.

The predictions are as folllows:

  • A 2 percent cut in national insurance
  • Potentially a 1 percent cut in income tax, however this in less likely as it’s a £7bn government cost
  • Review of current childcare benefits which are deemed potentially unfair
  • A ban of disposable vapes and a heavy tax on standard vapes
  • 5p a litre fuel duty
  • Introduction of 99% mortgages , helping first time buyers get onto the property ladder

But again needs to be debated as this could be argued it puts borrowers at risk.

Quite a few topics being proposed which could have an impact on the strength of sterling depending on the overall budget agreement.

Regarding where the rates are at present it is still a relatively good time to buy Euros, these rates could be short lived and the opportunity could be missed.

Get in touch with your currency consultant at A Place in the Sun Currency today to discuss a strategy for your currency purchases – we are here to help make your money go further.