Economy

Cumulative Annual Inflation Rises to 3.2%

According to the Office for National Statistics (ONS) report, inflation in the United Kingdom has reached 3.2% in the month of September, as a consequence of the increase in the price of food, transport, along with other goods and services. This increase is associated with the reopening of the British economy after the lock-in during the beginning of the pandemic.

According to the government agency, the figure is an unprecedented figure since records began to be kept in 1997. They believe, however, that the rise in inflation will be temporary, as the economy is able to return to normal without any restrictions.

It is important to remember that the lifting of restrictions that began in March 2021 with the reopening of schools and various sectors of the economy brought with it an increase in prices not only for food and transport, but also for fuel, used cars and video games, according to the ONS.

The Bank of England, which last year held its interest rate at 0.1 percent to help control the economic impact of the pandemic, recently reported that annual inflation is likely to reach 4 percent by the end of the year, although it also believes this will be a temporary phenomenon.

Business

Retail Store Sales Decrease while Restaurant and Online Sales Increase

Retail sales in the UK continue to fall as people begin to go out and consume more outside their homes.

According to the Office for National Statistics (ONS), a fall of 07 in September was recorded for September following a fall of 2.8% in September. The drop is more pronounced in food retail outlets. This is a product of the lifting of restrictions which has led to people once again making use of cafes, bars or restaurants and no longer preparing as many meals at home.

It seems that the British have rediscovered their passion for nightlife and have turned their attention to regaining the normality lost after the confinement caused by the pandemic. This is a good sign for thousands of venues that had been closed. It is also an opportunity for thousands of employees to return to work.

On the other hand, online sales continue to increase. It is key to remember that the use of online stores increased during the shutdown.

However, it seems to be a use that is here to stay as it represents much more convenience for consumers and evidently there is an opportunity here for developers of online or digital services.

According to the ONS, the use of online stores went from 27.1% in July to 27.7% in August. This is in contrast to 19.5% in February 2020.

This phenomenon is due to the normalization in spending and consumption patterns. Some sectors are gaining and others are losing as the economy gets back on track. Entrepreneurs and investors must be prepared for these scenarios and move the key pieces so as not to see their businesses affected.

Taxes

New Tax to Fund Social Assistance

The government has announced the implementation of a new tax to finance the Social Assistance system after the hard blow received during the pandemic.

The measure comes as a bucket of cold water. One of the promises made by the British Prime Minister, Boris Johnson, was not to increase taxes under his government. However, the politician excuses that this is an extraordinary situation and that in 2019 when he launched his candidacy, the pandemic was not in sight.

Contact our experts

What is this new tax about?

Employees, employers and self-employed will have to pay 1.25 pence more in the National Insurance pound from April 2022.

Who pays this new tax?

Employees, employers and self-employed will have to pay this new tax within their annual returns. The only novelty is that it will be charged as a new health and social care tax.

How much will it be?

This increase will result in an employee earning £20,000 a year paying £130 extra. Just as a person earning £50,000 a year will pay £505.

Currently, workers earning between £9,564 and £50,268 a year pay 12% national insurance on their earnings.

So if earnings exceed £50,000, National Insurance becomes a small proportion of the wage bill.

What is the tax purposed for?

The government estimates that these changes will raise £12 billion a year, which may help to address the pressure on the NHS.

A portion of this tax revenue will then be used for the social care system for three years.

This will be used to help people who need care because of their age or health condition. In particular, it will work for clothing, medicine and food.

The aim is to ensure that these people pay no more than £86,000 in care costs from October 2023.

In addition, anyone with assets valued at less than £20,000 will have their care fully covered by the state.

Those with assets valued at £20,000 and £100,000 will have their care services subsidized.

Legislation

Government Plans to Capitalize on New Brexit Freedoms

EU laws that remain on the statute book after Brexit will be improved or repealed if they do not benefit British citizens or businesses.

Individual regulatory reforms will be carried out and improved in order to stimulate digitalization and innovation in technology and the economy.

This announcement follows recommendations offered by the Taskforce for Regulatory Reform, Innovation and Growth (TIGRR) led by Sir Iain Duncan Smith.

Thousands of individual EU regulations that automatically remain on the statute book after Brexit, known as "Retained EU Law," will be reviewed by the government to ensure they are helping the UK to thrive as a modern, dynamic and independent country and encourage innovation in the British economy.

The review will aim to remove priorities and facilities that the EU has within UK laws that do not benefit UK businesses and individuals who are entrepreneurial to the greatest extent. This is clearly a move that aims to put the national interest as a priority.

The measures seek to boost sectors such as:

-Artificial intelligence

-Data storage

-Transport (maritime, air and land)

-Agriculture

The aim is to benefit these sectors in order to create the country's own standards and break with those imposed by the EU, which the British authorities consider outdated and limited. The idea is to renew the important sectors of the economy and trade to make the country a more modern and competitive power.

For more information about the UK or setting up your business in the country from our specialists, please contact us.