General Insurance Article - Fidelity comments on the Queen's Speech

 Investors

 “With the introduction of an EU referendum bill, UK investors will no doubt face a period of uncertainty. Possible results of a UK exit from the European single market, or ‘Brexit’ could include a reduction in UK GDP thanks to lower exports to the EU, less direct investment in Britain (most of it comes from Europe), a downgrade in the UK’s credit rating and lower for longer interest rates to compensate for the slowdown in economic activity.”

  

 Parents

 “As it stands, British parents shoulder some of the highest childcare costs in the world. It is important for all families to work childcare costs into their broader financial planning. Cash-strapped parents will no doubt welcome the increase in free childcare for three and four year-olds to 30 hours a week, however the less welcome news is that this proposal is expected to be funded by reducing tax relief on pension contributions.

 “Further tinkering to the pensions regime is unwelcome especially if it disincentives pensions savings – few parents will be willing to sacrifice pension tax relief for a brief respite in their child care fees. Pensions must remain attractive for all sections of society if we are to see the full benefit of the reforms.”

  

 Tax payers

 “The Queen had some good news for taxpayers with the announcement that the so-called five-year ‘tax lock’ preventing rises in income tax, VAT and National Insurance to be written into law. The other good news is a proposal to raise the amount you can earn without paying tax to £12,500 by 2020 and tie future increases in the threshold to the national minimum wage. Increasing the personal tax-free allowance is a good way to keep voters happy by putting more money in taxpayer’s pockets. But it is also an expensive tax cut for the government as it drags more individuals out of tax in a country where income tax already tends to be top heavy.”