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Following Rishi Sunak’s much anticipated announcements on 23 March 2022, we take a closer look at his ‘Spring Statement’ and what it means for your money and financial plans.
On Monday March 23rd 2020, the UK went into its first lockdown, following the outbreak and rapid spread of coronavirus.
At this point, Rishi Sunak had been Chancellor of the Exchequer for little more than a month, having replaced Sajid Javid on February 13th. He delivered his first Budget a month later, presenting what he then described as a ‘temporary, timely and targeted’ response to the coronavirus outbreak. The measures, he said, would ‘greatly improve’ the chance of the UK economy rebounding in the second half of the year. In retrospect, perhaps the most prescient comment came from Andrew Neil, then working for the BBC, who said that the Chancellor had “splashed the cash” and a huge increase in borrowing was on the cards.
As we all now know, the global pandemic had a much greater impact than Rishi Sunak could have anticipated. In 2020, the UK economy contracted by 9.4%. Having started the year at 7,542, the UK’s FTSE-100 index of leading shares fell 14% to end the year at 6,461.
And then the economy did bounce back. As the vaccine programme was rolled out and the pandemic finally loosened its grip in 2021, the UK economy grew by 7.5%, while the stock market recovered nearly all the lost ground, ending the year at 7,385. By January of this year, the papers were finally reporting that the UK economy was back to ‘pre-pandemic levels’.
Many of our clients will know the famous quotation from former Prime Minister Harold Macmillan, who when asked by a junior reporter what his greatest problem was, simply replied: “Events, dear boy, events.”
As Chancellor, Rishi Sunak has had more than his share of ‘events’. First, there was the pandemic and then, on February 24th this year, the Russian invasion of Ukraine, as well as rising inflation, rapidly increasing energy prices and a looming cost of living crisis. Despite the UK economy rebounding in 2021, the economic background to the Spring Statement was anything but rosy.
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If you have any questions about how any of these changes may impact your financial plans, please get it touch with your Ascot Lloyd Financial Advisers who will be happy to help.’
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