As 30 October draws nearer, much of the attention has centred around potential changes to Inheritance Tax (IHT) and Capital Gains Tax (CGT).
Yet, inflation, that ever-present force shaping our daily lives, may also be impacted by what Chancellor Rachel Reeves unveils.
The latest data shows inflation has dropped to 1.7 per cent, its lowest point in over three years, thanks largely to cheaper fuel and airfares.
It is a fleeting relief, though, as rising energy costs, spurred by Ofgem’s recent price cap hike, may soon push inflation back up.
A precarious path for the Chancellor
Reeves faces a delicate balancing act.
On the one hand, she must address Labour’s claim of a £22 billion shortfall in public finances, left behind by the previous Government.
This has prompted discussions of tax increases and spending cuts, potentially totalling £40 billion.
While such measures may help cool inflation by curbing demand, they could also impact the fragile 1 per cent growth that the economy is currently experiencing.
What will the Bank of England do next?
Meanwhile, the Bank of England is weighing up a potential interest rate cut in November, possibly trimming rates to 4.75 per cent.
The direction they take will largely depend on the Budget’s outcomes.
Should the Chancellor introduce substantial spending cuts, the Bank may feel emboldened to lower rates.
However, if the fiscal measures are deemed insufficient, higher rates may persist, continuing to impact both savers and borrowers.
What does this mean for you?
The decisions made in this Budget will affect the financial futures of businesses and individuals.
Tax rises and spending cuts might tighten your belt, and inflation combined with interest rates will play a role in determining how far your money goes.
Preparing for Budget Day
The Budget’s ripple effects will be felt far and wide.
Now is the time to reassess your financial plans and ensure you are prepared for the changes that may lie ahead.
For advice on how the Budget could impact you, our expert team is ready to help guide you. Reach out to us today.
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