Following the Chancellor's Autumn Budget 2024 speech, the UK bond market reacted positively, with UK bond prices strengthening. The yield on 10-year bonds decreased from 4.3% to 4.2%, while the 30-year gilt yield fell by 9 basis points to 4.69%. This stability in bond prices indicates growing investor confidence in the government’s strategy to balance fiscal responsibility with growth initiatives.
Major Announcements from the Autumn Budget 2024
Healthcare Investment
- The budget allocates £22.6 billion to day-to-day NHS spending and £3.1 billion for capital investments. This funding aims to enhance healthcare services, including:
- £1 billion for repairs and upgrades.
- £1.5 billion for new hospital beds.
- Investment in diagnostic tests and surgical hubs to significantly reduce waiting times for patients.
Education Sector Funding
- An increase of £6.7 billion in capital investment for schools marks a 19% real-terms rise. Additional £2.1 billion will be directed towards essential school maintenance, addressing critical infrastructure concerns such as Raac (crumbling concrete).
- Funding for special educational needs will increase by £1 billion (6% year-on-year), with a focus on expanding breakfast clubs to support early learning.
Fiscal Policy Adjustments
- The budget introduces a shift to Public Sector Net Financial Liabilities (PSNFL) as the main debt measure, accompanied by four fiscal guardrails to ensure responsible borrowing.
- The government maintains a stable level of public investment, although projections indicate a decrease from 2.5% of GDP as set by the previous administration.
Tax Policy Changes
- Income tax and National Insurance thresholds will remain frozen, affecting take-home pay. Key tax policy changes include:
- An increase in capital gains tax rates: 18% for the lower rate and 24% for the higher rate.
- A 50% increase in air passenger duty for private jets.
- Employer National Insurance will rise to 15%, with a threshold reduction expected to generate £25 billion annually.
Welfare Reforms
- The government plans to crack down on welfare fraud, with an anticipated savings of £4.3 billion through enhanced enforcement and reforms aimed at improving system efficiency.
Overall Tax Impact
- The Autumn Budget is projected to raise an additional £40 billion in taxes, which supports the government's funding of critical services in health and education while aiming for economic stability.
Chancellor Reeves emphasized the importance of strategic investments in fostering economic growth, underscoring a commitment to tackle pressing issues in healthcare and education. The 2024 Autumn Budget seeks to implement significant fiscal reforms while ensuring that the needs of UK households are prioritized.
For a detailed examination of the budget, refer to the full report on the Autumn Budget 2024.
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