"At first glance, it looks like Boris Johnson has abandoned one of his major election promises. That is to not raise taxes during this Parliament. However, trying to hold a government to its manifesto promises following the Brexit debacle and the Covid-19 is nigh on impossible.

Furthermore, considering that one of his promises was to increase spending on both healthcare and social care, he is stuck between a rock and a hard place.

The announcement of an increase of 1.5% in National Insurance contributions has divided the ruling Conservative Party

At first glance, it looks like Boris Johnson has abandoned one of his major election promises. That is to not raise taxes during this Parliament. However, trying to hold a government to its manifesto promises following the Brexit debacle and the Covid-19 is nigh on impossible.

Michael Saunders, a perennial hawk on the Bank of England’s Monetary Policy Committee, spoke yesterday of his concerns about further asset purchases. He believes that since the economy has now reached close to pre-Pandemic conditions, that it is time to start to taper support.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"Concerns that the likely slowdown in the economy in the third quarter compared to Q2 are growing. There are also medium-term fears that the fourth quarter will provide a downside surprise.

Comparisons continue to be made about the actions of the BoE, ECB and FOMC. Prior to the past two weeks or so, a tightening of monetary policy through a reduction of asset purchases in the U.S. was the clear favourite.

The UK economy has been the most consistent performer since the recovery started, that is due in no small part to the fact that the UK stole a march, by starting its vaccination programme first and has been able to maintain its performance.

Concerns that the likely slowdown in the economy in the third quarter compared to Q2 are growing. There are also medium-term fears that the fourth quarter will provide a downside surprise.

Outside the direct result of the Pandemic, there have been several factors that have threatened to derail the recovery, but have, so far, failed.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The Prime Minister faces a bumpy ride as discussions begin about what he believes to be one of his major election manifesto pledges. The increase in social care benefits may require a rise in taxes and has been labelled as taxing the young to ensure that the old are able to cling on to their homes.

The cost of social care has rocketed as the population has aged, with relatively few of the population making sufficient allowance for the care they will need once they retire from work.

The current level of National Insurance that is paid will not come close to covering the cost of the care needs of the majority of the population.

The Prime Minister faces a bumpy ride as discussions begin about what he believes to be one of his major election manifesto pledges. The increase in social care benefits may require a rise in taxes and has been labelled as taxing the young to ensure that the old are able to cling on to their homes.

Add to that the backlogs being seen by the National Health Service, with those needing routine procedures at record highs.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"Chancellor of the Exchequer Rishi Sunak is looking to hit around half of the working population with a 2% tax rise to fund the Prime Minister’s social care plans.

It is believed that around £10 billion of additional funding is needed to support the NHS as the country returns to normal, with waiting lists for routine procedures at an all-time high.

The alternative to raising taxes is a reduction in services and a return to austerity, a choice the Government has promised not to make.

Chancellor of the Exchequer Rishi Sunak is looking to hit around half of the working population with a 2% tax rise to fund the Prime Minister’s social care plans.

Sunak continues to issue statements that he is committed to keeping public finances on a sustainable footing, with a policy promise that Government debt should return to pre-Pandemic levels by the 2022/23 financial year.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The Bank of England’s new Chief Economist comes from a tried and tested background in the City of London.

Huw Pill follows ex-Goldman Sachs colleagues Mark Carney and Ben Broadbent on a well-trodden path to Threadneedle Street.

It had been suggested that the Bank was looking into a more diverse hire. Since Andrew Haldane announced in April that he would be leaving his post, BoE Governor Andrew Bailey had said how keen he is to tackle the lack of racial inequality at the institution, but in the end nothing has really changed.

The Bank of England’s new Chief Economist comes from a tried and tested background in the City of London.

Pill is believed to be on the hawkish side of monetary policy and will start next week. He is a far more conventional economist than his predecessor and will bring a more conservative, less unconventional view to the MPC

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The end of the Government’s furlough scheme at the end of this month is coming under question as the number of workers furloughed remains around 1.75 million.

Most of those still furloughed are working some hours, but there is a growing feeling that the end of the scheme will mean many businesses in the SME sector will be unable to remain viable, since they are still not producing sufficient cash flow to enable them to continue to trade.

The calls are for a more gradual window. There has already been a single cut from 80% of the worker’s wages to 60% and Trades Union Representatives are calling for a further cut to allow businesses to catch up with themselves, before the scheme is removed completely.

The end of the Government’s furlough scheme at the end of this month is coming under question as the number of workers furloughed remains around 1.75 million.

Chancellor of the Exchequer Rishi Sunak will have done his sums based upon an end to the scheme on September 30th and an extension would mean the ONS having to recalculate the effect and Sunak’s budget due for delivery in January would have to be completely recalculated.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The logistics sector of the UK economy is the glue which holds all other parts together.

It is facing a perfect storm of concerns that while not unique to the UK could blow the recovery off course.

First, there are shortages of raw materials due to demand outstripping supply and as an island, actually getting resources to where they are needed is fraught with issues.

The logistics sector of the UK economy is the glue which holds all other parts together.

Second, there is a genuine shortage of qualified lorry drivers that has been exacerbated by the departure of migrant drivers from Europe due to Brexit and a lack of competitive pay and conditions within the industry.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The UK economy, which is primarily driven by the services sector, is likely to embrace the change to a hybrid model as the country emerges from the Coronavirus pandemic.

A report published this week shows that a majority of businesses where home working is possible are positive about a change. There is a degree of scepticism among trades unions about some firms taking advantage of the situation and trying to reap the financial benefits themselves by attempting to negotiate salaries lower.

The switch to home working has clearly been exacerbated by the Pandemic, but the advances in communication which have driven the move were coming in any event.

The UK economy, which is primarily driven by the services sector, is likely to embrace the change to a hybrid model as the country emerges from the Coronavirus pandemic.

The jury is out regarding the benefit to work life balance versus the clear disadvantage to the social development that comes with having staff all in one place.

"

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The shortage of raw materials, spare parts and foodstuffs is worsening almost by the day. It appears there has been something of a perfect storm that is affecting just about every sector of the economy.

Logistics firms are struggling to fill vacancies for transport workers, Brexit red tape adds to delays, there is a global shortage of semiconductors and another rise in Coronavirus infections is seeing hundreds of thousands of workers self-isolating.

The situation has the potential to disrupt Christmas deliveries already, and several major food outlets are closing outlets. The closures are temporary for now, but if the situation continues, an escalation could become unavoidable.

The shortage of raw materials, spare parts and foodstuffs is worsening almost by the day. It appears there has been something of a perfect storm that is affecting just about every sector of the economy.

Supply chains are disrupted to such an extent that it is becoming more and more difficult to fill in the gaps,

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The UK economy will emerge from the Coronavirus Pandemic looks very different to how it looked pre-lockdown.

Historically, it often takes a major event to allow significant changes to take place. Brexit has become lost in the whole upheaval that the Pandemic has brought and going forward the Government will need to resurrect its plans for a more global approach to trade.

The UK’s relationship with the U.S. is currently strained over the decision made yesterday by President Biden not to extend the time limit for the final removal of troops from Afghanistan.

The UK economy will emerge from the Coronavirus Pandemic looks very different to how it looked pre-lockdown.

It means that there is potential for foreign nationals to become stranded when the borders slam shut, and the Taliban begins to take complete control.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.