The Budget is not what it used to be

LAST week Mr Hammond cut the annual tax-free dividend allowance, a measure that was only introduced this tax year, from £5,000 to £2,000.

Some described this as “collateral damage” in the attempt to level the playing field between the employed and self-employed, but whatever it is, it represents yet another thing to challenge investors seeking to maximise income.

Nevertheless, while Budget news dominated the news it failed to have much impact on financial markets.

Budget day used to be a major event back in the 1980s. Of course, you wouldn’t find anything as flash as a television on the dealing floors back then – and in any case, cameras were not allowed into the House of Commons until 1989 – so we huddled around a radio that someone had brought into the office.

Whatever then emanated from the speaker generally came as a surprise, because there was none of the modern convention of “testing” policies by leaking them to the press in the days and weeks leading up to the event.

Furthermore, with the Bank of England not being made independent until 1997, the Chancellor of the day would often use the Budget to unveil a cut in the base rate.

Investing was also a much more parochial affair, so that decisions made in Parliament had a much bigger effect on portfolios.

It would have been rare to find either overseas bonds or equities in client portfolios. Moreover, a quick look at the FTSE 100 at its inception in 1984 reveals a much greater domestic revenue bias than today. Remember that it was at least partially conceived as an index that would more accurately reflect the UK economy.

Even many of today’s multinationals that existed in a similar form had barely expanded beyond these shores. Emerging markets, a key contributor to international sales now, were very much in the chrysalis phase.

Changed days. John Wyn-Evans is head of investment strategy at Investec Wealth & Investment