13th September 2021
The Cambridge Weekly – 13th September 2021
Paying for it – the major economies ponder their balance sheets
Recently we noted the increasing importance of fiscal policy, and sure enough last week the UK kicked-off the new school year with a big fiscal bang. National Insurance contributions are on the rise, along with a further tax charge on dividends to fund the NHS and social care over the next few years.
Commodities transition presents new challenges
The economic recovery has been good to commodity traders. This is seen in oil prices which, after sinking to extreme lows in early 2020, have gone from strength to strength – buoyed by hopes of rebounding global economic activity and supply constraints. But commodity gains extend well beyond oil prices. In fact, the pandemic has accelerated the global shift toward renewable energy, with politicians and pundits lauding the ‘green recovery’. Technology, research and innovation are being directed toward this transition – to the great benefit of the commodities needed in green tech.
UK tightens its belt and holds its breath
The pandemic has been taxing, if you will forgive the pun. But it has been hard to escape the story of the week: Britons will face an extra 2.5 percentage points of tax from next year, after the government delivers 1.25% point hikes for both National Insurance contributions (employer and employees), and dividend pay-outs. The measures were contained in Boris Johnson’s health and Health and Social Care Bill, which comfortably sailed through the House of Commons last week on a 319 to 248 vote. The government hopes to raise an extra £12 billion a year for the beleaguered NHS, while capping social care costs at £86,000 over an individual’s lifetime.