Which Were the Winning Sectors in The UK Budget 2021

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Summary

• Rishi Sunak’s budget included promising measures to safeguard the coronavirus crisis
• The furlough scheme has been extended until 30 September, where employees will continue to receive 80 per cent of their salary

UK Chancellor of Exchequer Rishi Sunak announced his second annual budget on 3 March, which included promising measures to safeguard the coronavirus crisis that hit businesses, jobs, and industries. The budget has come as a ray of hopes for Brits as it has been exclusively designed to extend a helping hand towards the homebuyers, self-employed, etc.

Extension of several existing support packages and a flurry of new measures have been introduced by Sunak.

In this article, we have summed up all the major announcements that have been made by Sunak and highlighting the performance of those industries and sectors and stocks that have been boosted by the announcement of the budget:

1. Extension of Employment Schemes

The spread of the dreaded coronavirus infection and the pandemic-induced lockdowns around the nation had made people increasingly conscious about their jobs. Hence, policy in the form of the Job Retention Scheme or the furlough scheme was introduced to prevent unemployment risks and to boost new employment opportunities.

In the budget 2021, Sunak extended the furlough scheme until 30 September, where employees will continue to receive 80 per cent of their salary until the scheme ends. However, once the businesses start to reopen, employers will be asked to make a small contribution of 10 per cent in August and 20 per cent in September.

On the other hand, the support packages provided to the self-employed will also continue in the form of a fourth grant (February to April) and a fifth grant (May to September), covering the lost earnings.

Also, the Universal Credit increase of £20 per week for the lowest paid and most vulnerable group has been given an extension for a further six months.

The Office for Budget Responsibility (OBR) said that the support packages to save the jobs in the UK have worked as the unemployment rate projected currently is down to 6.5% as compared to 11.9 per cent that was estimated in July 2020. OBR has also estimated that the economy will grow by 4 per cent in 2021 and by 7.3 per cent in 2022.

Also Read: Budget 2021: How Sunak Plans to Protect Jobs and Livelihoods

The Society of Motor Manufacturers and Traders (SMMT), UK, has praised the government’s decision of extending the furlough scheme to September. The SMMT said that the announcement was essential for the UK car industry as there has been a massive fall in vehicle demand due to the Covid-19 pandemic and restrictions in movement.

Leisure and hospitality, which is one of the worst affected sectors, has also hailed the announcement.

Emma Clarkin, Chief Executive Officer of the British Beer and Pubs Association, said the extension of the furlough scheme until September would contribute towards helping the hospitality sector to save thousands of pub jobs.

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2. Grants to Restart Operations

The UK Government has announced that to help the businesses to restart their operations and come back on track, it will be providing a new Restart Grant in April.

Grants of up to £6,000 per premises will be given to the non-essential retail businesses that will open first, proceeded by the hospitality and leisure businesses (including personal care and gyms), with grants of up to £18,000.

Clarkin said that the grants would help the pubs and brewers in reopening and rebuilding trade before resuming operations with all the staffs.

3. Continuation of Business Rates Holiday

The British government had provided 100% business rates holiday, worth £10 billion, in England last year, covering all the eligible businesses in the hospitality, leisure and retail sectors. As per Sunak’s announcement, this year also, the government will continue with the 100 per cent business rates holiday till 30 June.

For the next nine months ending March 2022, business rates holiday will continue to be provided but will be discounted by two thirds, up to £2 million for closed businesses.

4. Extension Of VAT

Sunak also confirmed the extension of the 5 per cent reduced rate of VAT for six months until the end of September to protect the jobs of the employees in the hospitality and tourism industry. Beyond September, an interim rate of 12.5 per cent will be set out for the next six months. VAT worth approximately £5 billion will be cut in total.

Do Read: How Hospitality Stocks Reacted to Sunak’s Budget Announcement

5. Stamp Duty Cut

The cut in stamp duty (£500,000 nil rate band) for the UK housing sector, which was supposed to end on 31 March, has been granted an extension till 30 June. After which, the nil rate band will stand at £250,000 until 30 September. The usual level of £125,000 will return from 1 October.

The UK housebuilders have welcomed the Government’s decision and stocks like Barratt Development PLC (LON: BDEV), Berkeley Group Holdings PLC (LON: BKG), Persimmon PLC (LON: PSN), and Taylor Whimpey (LON: TW.) have shown a positive response to the announcements.

Related Read: Rishi Sunak’s Budget 2021 Boost Real Estate Sector, Most Stocks Up

6. Higher Mortgage Percentage Reallowed

Sunak has also announced that major UK lender such as Barclay PLC (LON: BARC), HSBC Holdings PLC (LON: HSBA), Lloyds Banking Group PLC (LON: LLOY), NatWest Group PLC (LON:NWG), Banco Santander S.A. (LON:BNC) will be offering 95 per cent mortgages to home buyers who can only afford a 5 per cent deposit from April.