Money Round Up – UK Budget, Merkel and Germany
Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.
Hi and welcome to this weeks money round up where we look over last weeks UK budget and review the impact Germany’s Chancellor, Angela Merkel, has had on the economy following her announcement to step down in 2021.
The press, and media generally, have now dissected and commented on every aspect of Phillip Hammond’s fifth budget, since last Monday. As such we thought we would focus on the main components of his speech to parliament.
Employment is at a near record highs and will keep growing. Unemployment levels are at a 40-year low, with over 3.3 million people gaining work since 2010. This has fuelled economic growth in every year since 2010, which is projected to continue until 2023.
An expected 2.4 million workers will benefit from an increase in the national living wage, which is set to go up from £7.83 an hour to £8.21 in April 2019. Also, The Personal Allowance – the amount you earn before you have to start paying Income Tax– will increase by a further £650 in April 2019 to £12,500.
The amount people will have to earn before they pay tax at 40% will increase from £46,350 to £50,000 in April 2019.This means that in 2019-20, there will be nearly 1 million fewer higher rate taxpayers than in 2015-16.
It is acknowledged by all parties that the budget this time around is happening at a time of relative uncertainty surrounding Brexit’s exact outcome. Despite this uncertainty, the underlying message from Hammond was reassuring.
Last weekend at the Hesse state election in Germany, the German Chancellor and Europe’s most powerful politician Angela Merkel announced she will step down in 2021. For many, Merkel represents stability in an unstable and shifting world. So why has Merkel’s political grip loosened?
Merkel’s hand appears to have weakened within the CDU party after she shifted its communist roots, propelling it to Germany’s political centre. Despite her tarnished popularity, Germany has falling debt levels and the world’s largest current account surplus; making the German economy the 4th largest in the world.
But German politics today is splintered and polarised, just like many Western allies. The far-right populist Afd party is capitalising on the immigration crisis and a more inward looking Germany would worry European leaders, especially close ally, French President, Emmanuel Macron.
Whoever succeeds Merkel, and eventually steps up to lead Europe, will be the subject of much debate and speculation. One wonders if this will be a big distraction, making it necessary for Europe to agree a quick deal with UK Brexit negotiators rather than dragging on into a more uncertain political era.