The UK government’s recent Budget changes have left investors sceptical about potential market improvements.
- Chancellor Rachel Reeves aims to bolster the economy through revised fiscal rules and increased taxation.
- Planned tax reforms include adjustments to capital gains and inheritance taxes.
- Global investors express concern about the effectiveness of these measures.
- The Budget faces criticism for not sufficiently addressing the needs of the financial market.
Chancellor Rachel Reeves has unveiled significant changes to the UK’s fiscal landscape, hoping to rejuvenate the economy. At the heart of her approach is a tax increase of £40 billion intended to rectify the country’s financial imbalances, a deficit attributed to the previous Conservative administration.
These reforms involve alterations to the capital gains tax (CGT) system, notably increasing the lower rate from 10% to 18% and the higher rate from 20% to 24%, while maintaining the status quo for residential property CGT. Furthermore, carried interest rates will rise to 32% starting in April next year.
Looking ahead, inheritance tax reform is set to impose a 20% levy on shares listed on the Alternative Investment Market, among other adjustments expected in the coming years. However, the effectiveness of these measures in making the UK market more attractive is questioned by investors globally.
Doubts linger regarding the Budget’s capacity to significantly enhance financial attractiveness. The Financial Times highlights skepticism among investors, indicating that government-led fiscal reform has historically struggled to deliver sustained market interest.
The overarching sentiment is that while the changes may address immediate fiscal concerns, they fall short of providing long-term solutions needed to invigorate investor confidence, essential for market revival.
Investors remain unconvinced that the new Budget will achieve its intended impact on market allure.
