Today (27th October 2021) Rishi Sunak delivered his autumn budget speech, promising his budget will “deliver a stronger economy for the British people.” The chancellor stated a real-term spending increase for “every single department”.
Discover more about how this has affected gold and silver prices in this article.
Britain’s economy seems to have recovered close to pre-pandemic levels with the help of vaccines and the easing of covid restrictions. However, the risk of severe shortages of workers and materials is holding back the growth and putting a complete recovery by Christmas at risk.
Today (27th October 2021) in the House of Commons, Chancellor Rishi Sunak revealed his Autumn budget. He unveiled the government’s tax and spending plans for the year ahead.
Rishi Sunak stated his budget “delivers a stronger economy for the British people: stronger growth, public finances and employment.” The chancellor said the “budget does not draw a line under Covid, but does begin the work of building an economy post-pandemic.” He promised he will give people the support they need with the cost of living and levelling up (Guardian, 2021).
So Where Is The Budget Going To Be Spent?
The chancellor covered different areas in which the budget will be spent, here are some of the main points (BBC, 2021):
The economy and public finances
- Inflation pressures are affecting the UK economy and OBR forecast it to rise to an average of 4% over next year.
- UK economy is predicted to return to pre-covid levels by 2022.
- Unemployment is expected to peak at 5.2% next year, lower than previously predicted.
- Wages increase by 3.4% since February 2020.
- Borrowing as a percentage of GDP is forecast to fall from 7.9% this year to 3.3% next year.
Taxes and spending
- The universal credit taper rate will be cut by 8%, decreasing it from 63% to 55%.
- 50% business rates discount will apply in the retail, hospitality, and leisure sectors, up to a maximum of £110,000.
- £24bn dedicated for housing – £11.5bn for up to 180,000 affordable homes.
- £640m a year to address rough sleeping and homelessness.
- Levelling Up Fund will mean £1.7bn will be invested in local areas across the UK.
- Extra £2.2bn for courts, prisons and probation services.
- Tax relief for museums and galleries until March 2024.
Education
- Schools will get an extra £4.7bn by 2024-25.
- Nearly £2bn will be allocated for new funding to help schools and colleges to recover from the pandemic.
- Schools funding to return to 2010 levels in real terms – an equivalent per pupil cash increase of more than £1,500.
- £300m will be spent on a “Start for Life” parenting programme, with an additional £170m by 2024-25 promised for childcare.
Travel
- Flights between airports in the UK nations will be subject to a new lower rate of Air Passenger Duty from April 2023
- Financial support for English airports to be extended for a further six months
- A new ultra long haul band in Air Passenger Duty for flights of over 5,500 miles will be introduced from April 2023
Alcohol
- The planned rise in the duty on spirits, wine, cider and beer will be cancelled.
- Rates on many lower alcohol drinks including rose wine, fruit ciders, liqueurs, lower strength beers and wines to fall.
- A new, lower rate of duty on draught beer and cider will cut the rates by 5%.
- Taxes cut on sparkling wine and draught beer.
What has this done to precious metal prices?
Budget Speech Affect on Gold Prices
Gold prices rose by £4.19 an ounce on the day that the chancellor unveiled his budget. At the start of 27th October 2021, gold spot prices were £1,302.36 and went through major fluctuations throughout the day. At 08:30 gold hit its lowest of the day at £1,297.48 an ounce where it then followed a bearish trend while waiting for the budget speech to start.
At 12:30 when Sunak began his speech gold prices were £1,304.49. During the speech, gold prices peaked at £1,306.45 at 13:10 before dipping to £1,302.81 at 13:30. The speech ended at 13:50 raising the gold prices to £1,306.05 where it continued to peak at its highest £1,309.65 at 14:30. After the speech Gold continued to fluctuate it dipped at 15:10 to £1,300.37 before rising again to £1,307.00 (17:00).
Budget Speech Affect on Silver Prices
Silver prices finished exactly how they started on the day that the chancellor unveiled his budget. At the start of 27th October 2021, silver spot prices were £17.55 an ounce and likewise to gold faced major fluctuations throughout the day. At 06:40 silver hit its lowest price of the day of £17.38. On the run-up to the budget speech silver prices fluctuated drastically.
At 12:30 when Sunak began his speech silver prices were £17.49 and raised to £17.56 during the speech. The speech ended at 13:50 at which the silver price was £17.55 where it continued to peak at its highest £17.65 at 14:30. After the speech Silver continued to fluctuate it dipped at 15:10 to £17.46 before rising again to £17.55 (17:00).
