After the chaos resulting from the previous chancellor’s disastrous "mini" Budget, the government has fallen on its sword and it seems we are almost back to square one.
Nearly all tax-cutting measures – hailed to be the answer to the cost of living crisis – have been revoked and the UK has now been left in a holding pen, awaiting what will happen next.
We must now hope that Rishi Sunak, our new prime minister, will not throw things yet further into disarray.
Ironically, measures brought in to ease the burden on businesses and individuals, as well as the stated aim of simplifying the tax code, have caused more confusion and complexity than ever at a time when the country is calling out for stability and reassurance.
What happens now is anyone’s guess, but knee-jerk reactions to reverse poorly thought-out measures are clearly not the answer, and the chancellor’s next steps in his fiscal statement on October 31 (assuming it still happens) need to be carefully planned and costed to restore some kind of order.
Confusion does not breed confidence
It is unsurprising that businesses and individuals will be feeling blindsided, in the wake of multiple Budget U-turns with little warning. Such drastic tax changes (and their reversals) have no doubt made it difficult to plan ahead.
Many businesses and individuals, who may have had plans foiled amid the U-turns, have likely lost confidence in planning for the future – especially over the next few weeks ahead of another big announcement.
Not only this, but financial advisers are no doubt struggling to give tax advice in the absence of any clarity – for example, we have given the same client different advice three times this month alone.
A proof point on the damage from uncertainty has been in the markets, with lack of confidence from investors in the UK and the pound creating further chaos.
And with a lack of any Office for Budget Responsibility forecasts until this point, it is no wonder investors, markets, clients and businesses are increasingly uncertain on what the future will hold.
While markets and the pound are admittedly rallying, not all can be fixed by going back on bad decisions, and clients will likely be impacted for some time.
What damage has been done?
Leaving the damage to political credibility aside, the cost of borrowing has increased, and those paying mortgages or thinking about getting on the property ladder may have had to delay their plans as a result.
And it is not only younger people who are affected; those with private pensions may now be revisiting plans to retire, given the real-terms cuts to their value.
The impact on those with public pensions remains to be seen, but if a decision is taken to remove the pensions triple lock it will impact individuals by an estimated £400 a year – not a decision that should be taken lightly.