interactive investor comments on the economic statement

The roller-coaster ride for UK markets and personal finances is not yet over.

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The economic statement delivered by the new chancellor does not mark the end of what has been a roller-coaster ride for UK markets and personal finances. The nerve-jangling ride of U-turns is not over. The chancellor issued an ominous warning that even more difficult decisions will be made in the next fiscal event on Halloween. As such, people should strap themselves in for further twists and turns as the government pursues a new strategy to stimulate economic growth and to rein in rampant inflation.

“More stick, less carrot seems to be the new approach as it has become clear that the government needs every tax pound it can get to chip away at the colossal government debt, with the cost of borrowing on the up – something that has been troubling markets. And further changes are inbound. There could be a real term cut to the value of benefits payments, while the spectre of higher interest rates could pile on the affordability squeeze for borrowers.

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“The scrapping of the 1p cut to the basic rate of income tax, the increase in dividend tax and the rise in a corporation tax are tell-tale signs of the difficult measures to come. It is increasingly becoming clear that a cocktail of spending cuts and tax rises to get the UK economy back on an even keel could be on the cards. As such, it is important for people to make as much use of current allowances while they can before any changes are made.”

Alice Guy, Personal Finance Expert, interactive investor, says: “The latest U-turn will add to the financial woes of households as energy bills could soar again in the spring.

“The planned income tax cut is also in the bin, leaving workers with little to offset spiralling bills.

“For mortgage holders, there’s no good news, as multiple U-turns have undermined market confidence in the government, forcing up gilts yields, and making interest rate hikes more likely. This has pushed up mortgage rates and encouraged lenders to pull cheaper products.

“Investors are also facing more pain as the latest reversal means national insurance rise on dividend income will not be scrapped as planned.”