The GBPEUR exchange rate was higher by 0.12% after the latest Budget from Rishi Sunak. The majority of its contents were leaked ahead of the event and this prevented any surprises for the markets.
There was even praise from Labour as veteran politician Lord Field said the budget was the best he had seen his 42 years of politics. GBPEUR trades at 1.1580 with no important economic data ahead for the rest of the week.
Sunak Vows the ‘Recovery Starts Now’
The Chancellor Rishi Sunak has vowed that the “recovery starts now” after he delivered his post-virus Budget to Parliament.
The headlines were that income tax thresholds are set to be frozen until at least 2026, while corporation tax for larger firms will soar from 19% to 25% as expected.
These measures will lead to the largest tax burden for the country in 50 years, but the finance minister has to recoup the £400bn spent on the coronavirus.
The Chancellor said: “I know the British people don’t like tax rises, nor do I. But I also know they dislike dishonesty even more. That’s why I’ve been honest with you about the problem we have and our plan to fix it.”
The Treasury estimates that the income tax freeze will raise an extra £19bn for the government by 2026 and when you put this against the £400bn, it highlights the hole that has blown in the public finances.
Other highlights of the budget were an extension of the furlough system to the end of September. An extra 600k self-employed workers have also bene added to the pool after being ineligible for the last payments. First time property buyers are also set to receive support, while the Chancellor is seeking to increase trainee programs and apprenticeships to help lower youth unemployment.
The pound v euro saw a muted reaction as much of the details were confirmed, while traders are unsure about making larger bets with a cautious reopening plan and fiscal pressures.
Merkel Bows to Pressure, UK Retail Increase
German Chancellor Angela Merkel agree on Wednesday to gradually ease virus curbs in Europe’s largest economy, caving to recent political pressure and public anger seven months before the country’s election.
A recent YouGov survey found that just 35% of Germans support the current restrictions, down from 73% at the start of the pandemic.
Germany is set to ramp up its vaccine rollout after a poor start to its campaign and rapid testing will also begin.
The UK retail sector saw a double-digit rise in footfall in February as lockdowns weighed on morale. Data from Springboard, saw UK retail footfall surging 16% month-on-month in February. This led to a decrease in the annual figure from 66% to 66%.
The figures show the growing discontent with being stuck at home and the country could see a strong rebound in activity over the next few months as restrictions are lifted. Get in touch using the form below to discuss these factors in further detail and how your currency exchange is likely to be impacted when the country returns to a more normal level of economic activity.