Mini-Budget expected on 23 September

Chancellor, Kwasi Kwarteng, is expected to deliver an emergency ‘mini-Budget’ on Friday 23 September, in an effort to help address the ongoing cost-of living crisis.

Several news outlets, including the BBC and Sky News, have reported that the mini-Budget will take place, and is expected to include promised tax cuts and a restriction on energy bill costs.

Parliament is currently suspended amid the national mourning period following the death of Queen Elizabeth II, with work expected to resume on Thursday 22 September.

The mini-Budget will take place four days after the Queen’s funeral and at the end of the official national mourning period.

“We’ll see a major change of direction in this mini-Budget, as Kwasi Kwarteng drives his growth agenda, fuelled by deregulation and tax cuts, in the belief it will ease the cost-of-living crisis and boost growth,” commented Hargreaves Lansdown senior personal finance analyst, Sarah Coles.

“But while it’s likely to offer immediate easing of the squeeze on household budgets, only time will tell whether it will improve the landscape for good, or steer us into dangerous territory.

“Tax cuts will help us all in the immediate future, cutting our outgoings during a time of runaway inflation. It is being done in the belief that this will then help people spend more and companies invest more, both of which would support growth. However, this comes at a cost, and there’s the risk it could end up damaging our financial resilience over the longer term.

“There’s also the question of whether there will be enough in this announcement to support those on the lowest incomes, or to help us build our long-term financial resilience.”

Hargreaves Lansdown outlined four policies that would help build financial resilience, including steps to support people on lower incomes to support their resilience in the future, including revisiting the Money Purchase Annual Allowance.

“People who are forced to raid their pension to pay the bills, or are returning to work to cope with higher prices, face a pension headache,” said Hargreaves Lansdown senior pensions and retirement analyst, Helen Morrissey.

“The rules mean once you’ve taken an income from your defined contribution pension, you can’t contribute more than £4,000 a year.

“This was supposed to stop people accessing their pension and then re-investing it for another round of tax relief, but the same thing could be achieved with rules which only kick in when someone has done this with the express intent to recycle the cash.”

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