UK Budget 2024

What is in the UK Budget 2024

UK Budget Announcement Summary

Find out what the latest UK budget means for you and your business.

£25 billion extra costs for UK business taxes and National Insurance contributions from employers from April 2025.

Record increases in public spending and taxes that will produce highest ever tax burden in UK. Allegedly due in part to £22 billion black hole from last government. £40 billion increase in UK taxes – biggest ever in cash terms. Increase in spending is over £70 billion over course of parliament, partly funded by tax increases and most of the rest by extra borrowing (or cutting government spending for some departments in real terms). Despite spending increases forecasts for long term growth being very low -only 1 to 2 percent GDP and a downgrade from where previously forecast to grow in longer term. Bank of England may have to delay possible interest rate cut due to this government borrowing record amounts to inject in short term into the economy without producing any real extra growth in economy long term.

Key Points Of UK Budget 2024

  • Funding for 2 scandals : Infected Blood Scandal (£11.8 billion) and Post Office Horizon Scandal (£1.8 billion).
  • Office for Budget Responsibility OBR says inflation around 2.5% inflation for next couple of years.
  • OBR says UK GDP will be 1.1% in 2024 and 2.0% in 2025. Anything after that is just fairytale story – and not even a good one!
  • Fiscal rules to include Stability Rule: UK will not borrow to fund day to day spending with longer term conditions. Around £26 billion deficit for couple of years.
  • Some government departments will have less money to spend in real terms due to inflation.

Tax

  • Minimum Wage : 6.7% increase in minimum wage. Over-21s to rise from £11.44 to £12.21 per hour from April 2025. Rate for 18-21-year-olds to go up from £8.60 to £10.
  • Carers Allowance to increase, increasing the amount carers can earn before they lose carer’s allowance – can earn up to £10000 a year without losing any of allowance.
  • Increasing protection of people from unfair dismissal
  • Triple Lock Pensions : to be protected – 4.1% increase in pensions over next couple of years.
  • Fuel Duty : Fuel duty to freeze for another year so the 5p cut to fuel duty due to end April 2025 will continue to April 2026.
  • National Insurance : keep National Insurance at same level on personal tax levels.
  • Employers National Insurance : Rate to increase by 1.2 % to 15% and lowered the level at which it becomes payable by employers – from £9100 to £5000.
  • Small Business : increasing employment allowance re Employer’s National Insurance.
  • Inheritance Tax : Inheritance tax threshold freeze extended by further 2 years to 2030. Changes to what is included which will increase tax on some people. Unspent pension pots also subject to the tax from 2027. Exemptions when inheriting farmland to be made less generous thereby increase tax on farming in UK.
  • Capital Gains Tax : increase from 10% to 18% at lower rate and from 20% to 24% at higher rate. Capital gains on residential properties unchanged at 18% and 24% respectively.
  • Tobacco: tax to increase by 2% above inflation and 10% above inflation for hand-rolling tobacco.
  • Vaping : New tax of £2.20 per 10ml of vaping liquid from October 2026.
  • Soft Drinks Duty : to review thresholds for sugar tax on soft drinks and consider extending it to include “milk-based” beverages.
  • Road Tax : From April 2025 electric vehicles will start paying road tax.The amount levied on new EV owners will remain frozen at £10 for their first year “to support the take-up of electric vehicles”. After that point, they will pay a standard yearly amount based on the lowest existing category – currently about £190 – that will increase in line with retail price inflation. Petrol, diesel and hybrid drivers face significant increases.
  • Air Passenger Duty : to increase £2 per person on economy flights. Private Jets duty to increase by 50%.
  • Business Rates : 75% discount on rates till April 2025 will reduce to 40% from April 2025.
  • Alcohol Duty : to rise in line with RPI the higher measure of inflation but cutting draft duty by 1.7% – equivalent of reduction of 1p on pint.
  • Corporation Tax : to stay at 25% until next election. Paid on taxable profits over £250,000.
  • Abolish Non Dom Tax
  • Fund Management :
  • Stamp Duty : increasing tax on second homes from tomorrow from 2% to 5%.
  • Levy on oil and gas industry to increase.
  • VAT to be added to private school fees from April 2025.
  • Income Tax : no extension of threshold freeze on income tax and National Insurance from 2028 which will rise in line with inflation.

Spending

  • Spending to increase by 1.1%
  • Tripling funding in Breakfast Clubs
  • Extra £300 million for Further Education
  • Strategic Defence Review published next year but funding increase in interim.
  • Mayors : increase in funding and increased autonomy on spending.
  • Devolved Nations : some tinkering around the edges on funding.

Investment

  • Public Investment : changing rules to new Investment Rule.
  • Capital Spending : must secure ROI at least as high as on Gilts.
  • Aerospace, Automotive, Life Sciences, Creative industries to receive investment uplift.
  • Broadband to get more funding.
  • Funding for house building including Affordable Housing including local authorities retaining 100% of receipts on council home sales. Social housing providers to be allowed to increase rents above inflation.
  • Money to fund removal of cladding.
  • Transport : increasing investment. Funding for upgrades. HS2 changes to include link to London Euston. Several other new transport projects to begin. Commitment to deliver upgrade to trans-Pennine rail line between York and Manchester running via Leeds and Huddersfield.
  • Potholes : increase investment funding.
  • Bus Cap : £2 cap on single bus fares in England to rise to £3 from January 2025.
  • New Green Projects : extra investment
  • Warm Homes Plan : extra investment
  • Education Buildings : increasing funding by £6.7 billion and increasing budget for school maintenance budget.
  • NHS : increasing funding by £22.6 billion  for day to day spending plus funding for Capital Spending on NHS buildings plant and equipment. Waiting times to be no more than 18 weeks.

Come back for more updates following additional business risk analysis of UK Budget 2024.

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Global Economic Tsunami

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Economic Forecast 2024

Risk Management for Business Leaders in the Face of Lower Economic Growth and a Softening Jobs Market in the USA, EU, and UK in 2024

Keith Lewis 6 November 2023

The global economy is facing a number of headwinds in 2023, including the ongoing wars in Ukraine and Gaza, high inflation, and rising interest rates. These factors are expected to lead to lower economic growth and a softening jobs market in the United States, European Union, and United Kingdom in 2024.

Business leaders need to be prepared for these challenges and take steps to mitigate the risks to their businesses. In this article, we will provide an overview of the economic outlook for 2024 and offer advice on risk management for business leaders.

Economic Outlook for 2024

The International Monetary Fund (IMF) (before taking into account war in Gaza) has forecast that global economic growth will slow to 3.2% in 2024, down from 3.6% in 2023. This is the slowest pace of growth since the global financial crisis in 2009.

The IMF expects the US economy to grow by 1.7% in 2024, down from 2.3% in 2023. The EU economy is expected to grow by 1.9% in 2024, down from 2.6% in 2023. The UK economy is expected to grow by 1.0% in 2024, down from 2.2% in 2023.

The slowdown in economic growth is expected to lead to a softening of the jobs market. The IMF expects the unemployment rate in the US to rise to 4.0% in 2024, up from 3.7% in 2023. The unemployment rate in the EU is expected to rise to 7.0% in 2024, up from 6.7% in 2023. The unemployment rate in the UK is expected to rise to 4.5% in 2024, up from 4.2% in 2023.

Risk Management Advice for Business Leaders

In light of the economic outlook, business leaders need to be prepared for the following risks:

  • Lower demand for goods and services: As economic growth slows, consumers and businesses are likely to spend less. This could lead to lower sales and profits for businesses.
  • Softening jobs market: As the unemployment rate rises,businesses may have difficulty finding and retaining qualified workers. This could lead to higher labour costs and disruptions to operations.
  • Rising interest rates: Central banks are raising interest rates in an effort to combat inflation. This could make it more expensive for businesses to borrow money and invest in growth.
  • Supply chain disruptions: The ongoing war in Ukraine (and new war in Gaza) and other factors have caused disruptions to global supply chains. This could make it difficult for businesses to obtain the materials and components they need to produce their goods and services.

Business leaders can take a number of steps to mitigate these risks, including:

  • Diversify their customer base and product mix: This will help to reduce their reliance on any one customer or product line.
  • Invest in technology and automation: This can help to improve efficiency and productivity, and reduce labor costs.
  • Lock in long-term contracts with suppliers: This can help to mitigate the risk of supply chain disruptions and price increases.
  • Build up their cash reserves: This will give them a financial cushion to weather any downturns in the economy.

In addition to these general risk management measures, business leaders should also consider the specific risks that are relevant to their industry and sector. For example, businesses in the retail and hospitality sectors may be more vulnerable to lower consumer spending. Businesses in the manufacturing sector may be more vulnerable to supply chain disruptions.

By taking the necessary steps to manage risks, business leaders can increase their chances of success in 2024 and beyond.

Specific Risk Management Strategies for Different Industries

In addition to the general risk management measures outlined above, there are some specific strategies that business leaders in different industries can take to mitigate the risks of lower economic growth and a softening jobs market in 2024.

Retail: Retail businesses can focus on increasing sales through online channels, offering discounts and promotions, and improving customer service. They can also reduce costs by streamlining their operations and negotiating better deals with suppliers.

Hospitality: Hospitality businesses can focus on attracting and retaining tourists, offering special packages and promotions, and improving the customer experience. They can also reduce costs by streamlining their operations and negotiating better deals with suppliers.

Manufacturing: Manufacturing businesses can focus on increasing productivity, reducing costs, and diversifying their product mix. They can also mitigate supply chain risks by building

Will you be unscathed from, or even benefit from, global financial tsunami?

A global economic tsunami is breaking. The impact will increase substantial in 2023. This global economic tsunami was triggered in spring of 2020. An economic atomic bomb was set-off deliberately, accidentally or carelessly by central banks and national governments around the world to protect businesses from Covid pandemic. The medicine has proven to be worse than the illness. Perhaps if the medicine was moderated the global financial tsunami we are just starting to suffer from would not have been created. Instead the world become addicted and then seemingly oblivious to the impeding danger of uncontrolled money printing and quantitative easing QE and cheap money swamping the global economy.

How likely is a global economic collapse?

The best we can hope for is a long deep depression not short shallow recession. If we are lucky we will avoid global economic collapse. However, it is probably 60:40 that a global economic collapse will happen. We are in a bad place from which we can recover at present, but poor decision-making from here will turn a bad situation into a global economic collapse.

How did we get here?

  1. Central banks slashed interest rates to near zero and even negative in some countries and printed fake money out of thin air professionally called QE. Once the sluice gates were opened and cheap to free money was splashed everywhere, inflation was inevitable – too much money and too little supply after supply chains were cut or severely restricted. Our central bankers and politicians tried to convince us printing more money in two years than has ever been printed ever before was creating just transitory inflation spikes. However, the runaway money printing has created difficult to control embedded inflation caused largely by business leaders profiteering. Business profits in 2021 2022 are off the scale and now employees want their share to compensate for loss of income in real terms against inflation and we are facing a winter of discontent at best in some countries, and in others, riots in the streets.
  2. The next phase following increased business profits and resentful employees wanting higher pay will morph into business cuts and increased layoffs including rising unemployment and higher business closures.
  3. The global economic tsunami is hitting some shores already. In Cryptoland we have seen the collapse of the second biggest crypto exchange or marketplace in the world. In the Bankingland firms like Credit Suisse could yet collapse. In the global financial tsunami in 2008 Lehmann Bros bank collapsed and was a high-profile casualty of the financial sector self-induced global financial crisis. Credit Suisse is a much bigger bank than Lehmann Bros bank. The collapse of Credit Suisse would induce global economic collapse. In the 2008 global financial tsunami, banks like Royal Bank Of Scotland RBS were considered too big to fail and became UK government owned (something like 87% owned). Slowly RBS is being sold off by the UK government but some 14 years later RBS has still not recovered. In fact, it kinda never recovered as it has been rebranded as Natwest bank. The RBS bank brand “too big to fail” washed away in the global financial crisis of 2008. Which big financial sector brands will be washed away by the global financial tsunami 2022?
  4. Retail investors, the little people, are like the people you see in real tsunami videos. They have been running about, bemused by the water initially disappearing from the beach or port. Retail investors have bought assets in 2021 2022 thinking that this is a buying opportunity that could setup up their investment for life. In fact, 2023 will be the buying opportunity of a life for investing in your future after the tsunami has wiped out money zombie companies unable to access cheap money any more. The remaining businesses will be on offer at sale prices. Retail investors have been or are about to be wiped out. S&P500 companies will make very little profit in 2023, if any, and their capitalisation will fall still further than a bad 2022 has hit share values. Institutional investors will hoover up cheap stocks and benefit in 2025 when shares will skyrocket once again, but many retail investors will have drowned in the global financial tsunami.
  5. Propertyland will be a slower burn, or partial drowning, in that some parts of world will go under into negative territory whilst other parts of the world will tread water for a year or two before recovering. Property prices are falling in some parts of the world. Some parts will experience a property price correction, but others will suffer property price collapse.
  6. Manufacturingland and Retailland are further inshore from the beach. When the global financial tsunami breaks in 2023 many businesses will simply be washed away never to recover. Others will rebuild and prosper with less competition to eat into profit.

Some politicians in the likes of USA try to tell you that inflation is no biggy! That should really be interpreted as the tsunami wave to hit in 2023 is no longer 100 feet high – it’s only 90 feet high! Will such a drop protect your business?

In fact, whilst official inflation figures may well drop slightly in 2023, some inflation like food inflation is unlikely to fall and could even increase as the effects of things like war in Ukraine, less fertilisation of the soil due to cost of fertilsers and policymakers restricting farmers from farming for climate protection reasons feed into the food supply chain in 2023.

How do we dig ourselves out of this hole we dug for ourselves or how does your business stop itself from falling into the hole with everyone else?

Relief from inflation will not happen until 2024 – if ever. It is unlikely that we will ever undershoot central bank interest rate targets of 2 percent ever again, or at least for decades.

You will need to set your business strategy to navigate a more difficult year in 2023 than 2022 was. Certain things outside of your control could dramatically make life easier in 2023 than can be realistically anticipated just now. Russia and Ukraine could agree a peace deal in 2023 for example. Santa is unlikely to bring this before the end of 2022 and there is little sign that 2023 will bring peace to these countries or the rest of the world. Even if the fighting was to stop now, the global economic pain will continue throughout 2023.

What is within your control to manage the risks to your business in 2023?

Get help to identify assess and manage your business risks in 2023 and beyond. Email [email protected] for more information or follow us via your favourite social media account click here.

Global Economic Tsunami

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You cannot change what happened but you can learn from it. However dwelling on past mistakes is not productive.

  • Mitigate negative impact of risk event and secure any benefits from risk event. Good can often come out of bad.
  • Learn lessons from risk events and move on quickly
  • Do not dwell on risk event impact as constantly punishing people from mistakes of past can be very demoralising and negatively impact on future business performance.

After the risk event make sure your risk management plan for future seeks to ensure it does not happen again but do not over do the risk controls. Reflecting on the lessons from the risk event facts is important but do not let emotions and pain of risk event change the risk perception of future likelihood of recurrence especially after some additional risk controls adopted maintained and reviewed.

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