UK economy: Where is the growth in this Budget?
Published On Oct 30, 2024, 1:36 PM
UK Chancellor Rachel Reeves announced a substantial budget aimed at growth, but most independent forecasts suggest it will not significantly boost the economy in the medium term. Key proposals include a rise in National Insurance for employers, which may dampen disposable income and private investment. The budget entails an increase in spending by £70 billion a year and significant tax hikes intended to fund public services, particularly in healthcare, but it might also be seen as a burden on job growth. The markets showed a mild reaction with a slight increase in government borrowing interest rates.
Stock Forecasts
EWU
Negative
The proposed budget suggests a shift towards higher taxation and increased government spending, which could negatively influence investor sentiment in the short term. The rise in employer National Insurance may keep business investments subdued. Given these factors, caution is warranted in UK-focused investments.
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