Fidelity International responds to the Chancellor’s budget announcement
In reaction to the Chancellor’s Autumn Budget, in which he announced a new £300million Supporting Families programme, including network hubs across the UK, Maike Currie, Investment Director at Fidelity International, commented:
“The Chancellor’s Budget was widely touted to herald in an age for optimism, but it was clearly bereft of realism. Today people are worried about a cost of living crunch - our own research ahead of the Budget showed this to be people’s biggest concern, yet, in this fragmented Budget there was very little to tackle this.
The measures to address childcare were a token gesture with miniscule amounts pledged. The measures to ‘help parents work’ have very little detail on how to help with the affordability of childcare. Likewise, there was very little about addressing the need for greater flexibility in the workplace and addressing the structural challenges in the labour market.
Childcare is a major challenge for British families, who shoulder some of the highest childcare costs in the world. It’s not just about the costs or getting the best care for your child - it’s as much about the long-term repercussions a flawed childcare system holds for women, who are still the primary caregivers. Many women drop out of the labour market when they have children often to never return. We require a truly gender-neutral labour market - this will only happen if the childcare issue is addressed.
While the increase in national living wage will benefit women, there was nothing to address the auto-enrolment £10k threshold - many women will still fall through the net. Today’s Budget was a missed opportunity to provide real support to hard-working people.”
In addition, Ed Monk, Associate Director at Fidelity International commented on the fact inflation is to spike to 4% next year, as the economy struggles to keep up with demand in the wake of Covid and Brexit.
“Households struggling as their costs rise will not recognise the optimistic vision set out by the Chancellor today. His own admission that inflation will average 4% in the next year leaves open the possibility that it may peak above even that level. Prices of many essential items are rising much faster than 4%. With energy, food and fuel bills rising, and mortgage repayments perhaps next, tinkering on alcohol and fuel duty is small consolation.
The only significant shelter the Chancellor offered from rising inflation was, rightly enough, aimed at the lowest paid - those on the minimum wage or working whilst on Universal Credit. Beyond that, however, most families will see a squeeze on their household budgets and should resign themselves
to a long year ahead of higher prices and higher tax via the National Insurance rate rise – with seemingly little the Government can do to lighten the load.
Higher inflation also means those who use savings and investments to help fund day-to-day living need a higher return if they want their money to not lose value. The stock market can potentially provide that, although investors should expect volatility as factors like the issues in supply chains and possible re-emergence of the pandemic play out over the next year.”