The appointment of new chancellor Jeremy Hunt has been highly anticipated since Kwasi Kwarteng was sacked last Friday.
If you remember the mini-budget we explained to you earlier, he said that almost all of the policies in the mini-budget have been reversed.
On Monday morning, the new chancellor outlined a revised statement and will release an economic plan on October 31.
This could be the biggest U-turn in British economic history and there is no alternative.
Income Tax
Basic income tax was planned to be cut by 1p in the previous mini-budget, which will come into effect in April 2023.
Please note that in this emergency declaration, the chancellor has kept the basic income tax rate at 20p indefinitely.
The reversal will generate £32bn a year for the government, although it won’t save higher income groups any more in tax bills.
National Insurance cuts plan unchanged
Earlier we told you about the changes to National Insurance following the release of the mini-budget plan.
Back in April, the former Prime Minister raised the NI ratio from 12% to 13.25% to fund the NHS and social care.
The change was again reversed by the Prime Minister and the temporary increase was scrapped, with the plan coming into effect on 6 November 2022.
It also means someone earning £30,000 would save £218 a year.
Energy Price Guarantee
The energy price caps we mentioned earlier in the article will support households for the next two years.
This plan is likely to change in April 2023.
Treasury will review energy prices and study how to support the energy bill.
Positive market reaction
In just three days since the new chancellor took office, both the broader London stock market and the pound have seen positive signs.
Many investors are hopeful that the new chancellor will further ease the government’s borrowing costs and help restore the market economy.
Although some tax breaks are facing delays or cancellations, this will not change investor enthusiasm.
In the long run, a stable market can help resolve living crises and inflation.
Will Mortgage Rates Fall?
As early as a few months ago, the Bank of England had been raising mortgage rates due to inflation.
If you’re planning to buy a home in the near future and you’re wondering if mortgage rates are going to drop dramatically.
This may become a bit difficult, as the market is currently not returning to long-term stability.
As such, it’s unlikely to see a cut in mortgage rates anytime soon.
