What to expect from the new Prime Minister
Liz Truss has been named the new Prime Minister, and she will assume office in the midst of an economic crisis, with soaring energy bills, rising inflation and a looming recession.
During a summer of hustings, Truss laid out her plans on tackling the economy. But what will these plans mean for the peer-to-peer lending community and the future of the sector?
- No new taxes
Truss has promised not to introduce any new personal taxes during her tenure as PM. She has also hinted at reducing the tax burden in several areas, including inheritance tax. Any tax cuts will be welcomed by families struggling with the cost of living, and could bolster the amount of money that households have to invest in tax-friendly options such as Innovative Finance ISAs.
However, analysts have said that the tax cuts may not go far enough.
“Truss is putting an awful lot of faith in tax cuts to ease the pain of rising prices and then kick-start economic growth,” said Sarah Coles, senior personal finance analyst at Hargreaves Lansdown.
“Of course, we’ll have to see whether all that sticks when the rubber hits the road. But with price rises of this scale hitting across the board, and propelling us into the biggest two-year drop in real incomes in a century, the government can’t afford to fall short when considering possible solutions.”
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- No windfall tax on energy companies
Soaring energy bills are set to put pressure on households up and down the country this winter, but Truss has ruled out a windfall tax on the profit-making energy companies enforcing the rate hikes. This may force more businesses and consumers to seek credit in order to make ends meet.
Dan Boardman-Weston, chief executive and chief investment officer at BRI Wealth Management at BRI Wealth Management warned that the energy crisis “will quickly deal a crippling blow to households and businesses as we head into autumn and winter.”
“Without support from the government, countless perfectly viable businesses will be destroyed whilst energy prices remain high,” he said.
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- An “unashamedly pro-business government”
Truss has pledged to run an “unashamedly pro-business government” by scrapping planned tax rises and considering a VAT reduction. While small- and medium-sized enterprises (SMEs) have welcomed any tax breaks, they have called for more short term help from the government.
“I congratulate Liz Truss and her team on a campaign that included small businesses, the self-employed and unleashing enterprise at its centre,” said national chair of the Federation of Small Businesses (FSB), Martin McTague.
“The challenge now is to deliver action that is big and bold enough to match the scale of the crisis threatening the existence of many small firms, and the jobs, livelihoods and communities which depend upon them.
“Small firms, not protected by an energy price cap, are seeing bills soaring out of control. This is at a time of sky-high taxes, rampant inflation and supply chain disruption, creating a toxic mix which must be addressed urgently.
“Small businesses are crying out for a comprehensive response which cuts taxes, limits spiralling bills, and provides direct cash support for the smallest businesses.”
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