24 March 2010
Experts at Brewin Dolphin, one of the UK's largest independent
private client investment managers, give first reactions to the
Budget below:
Jamie Matheson - Dividend Tax Credits and
pensions
Charlotte Black - ISAs and personal
taxation
Jonathan Newman - the Banks
Mike Lenhoff - the Markets
Jamie Matheson, Executive Chairman of Brewin
Dolphin said “`The long term costs the nation will bear as a
result of Britain’s pension time bomb will dwarf the
estimated £5 billion a year the Treasury raised by abolishing
the dividend tax credit in 1997. We have persistently called on
Government to restore the Dividend Tax Credit, a sentiment strongly
echoed by 74% of our clients in a recent survey, yet pensions were
not even mentioned in this speech.”
Charlotte Black, Head of Corporate Affairs said
“If inflation is a criterion for savers – notable in
the announcement of the indexation of ISA allowances from 2011
(+£350) - then with that exception savers and investors are
going to pay heavily for this Budget – with every other tax
allowance frozen and all increases announced in the PBR rubber
stamped. There was no mention of private sector pensions
– the second biggest crisis facing the country after the
deficit and the freezing of the IHT threshold is another big hit
for Middle England.”
Jonathan Newman, Banking Analyst at Brewin
Dolphin said “The big issue is the £94 billion of
credit the banks are expected to supply. There are not enough
people with realistic business plans, but lots who would like to
borrow for unrealistic ventures. The Chancellor can’t make
banks stand on street corners thrusting £20 notes into the
hands of likely-looking entrepreneurs! It’s window
dressing.
Re accounts for all - the notion of forcing Banks to open
accounts for all is no bad thing – though it may well be an
irritation and a cost for the institutions themselves. But he
should be encouraging the Post Office to offer a citizens’
account, or the Co-op. or the building societies - all of which
have a mutual aspect to them. And he could have funded it from
another tax on the banks. But at the end of day, he knows he needs
a vibrant bank sector – that can move the “good”
bits of their businesses offshore if he gets too acquisitive.
The share prices hardly twitched. Compared to the macro
environment and changes the regulations it’s nothing. The
macro issues are what matter.”
Mike Lenhoff, Chief Strategist said
“The Budget and for that matter the Election in so far as
they affect the economy are pretty well incidental for the FTSE
100, which is made up of international blue chips tapping into the
recoveries in the US and Far East. However, they are relevant in so
far as sterling might be affected. Any weakness in sterling –
particularly against the dollar – merely enhances the appeal
of the overseas earners although it makes it more expensive for
companies sourcing from overseas. However, the budget is relevant
for the Gilt market, which has been moving well recently and
against the usual received wisdom. The election may also be
relevant. Could the latter be influencing the gilt market? A Tory
victory and the pledge to impose more urgent fiscal austerity to
rectify the deficit and preserve the UK’s AAA rating may not
help many of the SMEs** whose earnings are more dependent on the
domestic economy, but it would help the gilt market.”
Brewin Dolphin manages £21 billion of funds for over
130,000 private clients and of this over £12 billion is on a
discretionary basis. BD has 40 offices throughout the UK and
Channel Islands and Brewin Dolphin Investment Banking is corporate
adviser to over 100 small and medium size quoted companies and
institutions.