Trust me... good times are around the corner

WH AT an awful year we’ve j ust experienced. Never again I hope. Fear, loss, lockdown, separation from loved ones (Mums and Dads, especially) and economic emasculation on a scale I’ve not witnessed before in my 31 long years as a personal finance editor for a national newspaper.

Yes, tough times, awful times, sad times – and we’re not out of the woods yet as coronavirus continues to rampage through our island like a wildfire out of control and most of the country is now in virtual lockdown.

But the new year that has just commenced – happy New Year to you all – offers hope we will soon leave the devastation of 2020 behind. In its place will come replenishment, rebuilding and economic revitalisation. More boom than last year’s doom, although I am sure there will be hiccups along the way.

The approval in recent days of the Oxford- AstraZeneca vaccine represents a massive step forward.

Provided t he Government uses all its nous to ramp up the vaccination programme in the coming weeks, the wrath of coronavirus should be quelled by spring, allowing ‘tiers’ to be dismantled (for good) and for life to return to near-normal. With that will come a semblance of economic stability, followed ( hopefully) by a period of sustained growth.

And, of course, the Brexit deal signed last Wednesday means the nation – directed by Government – can now start preparing for a life unencumbered by Europe’s bureaucratic demands.

Yes, our break from Europe will come at some cost with the loss of convenient perks such as the EU pet passport, the European Health Insurance Card and the Erasmus scheme for students. But some of these will in time be replaced by broader ‘global’ lookalikes.

There will also be some extra costs as a result of waving goodbye to the EU – impacting on travel – but the fact remains that we will be better for being out rather than in.

Certainly, the UK stock market, the mainstay of our pension funds and investments, reacted positively to a deal being done although the FTSE 100 ended the year in subdued mood at 6,460 (some 15 per cent down on the year). What we now need from the Government is a plan that will allow business to prosper once the threat of coronavirus is assuaged.

That task lies primarily with Chancellor Rishi Sunak who so far has done an effective job in shielding many (not all) businesses and workers from the savage commercial consequences of lock down and restrictive tiers.

The Chancellor’ s March Budget will be pivotal. He could revert to prudent Conservative-type and sweep in a new era of austerity (no thank you).

Alternatively, he could well spring a round of nasty tax rises on the middle classes (again, no thank you). There are already whispers that he has his sights on both capital gains tax and tax relief on pension contributions as ways of either raising revenue or cutting back on expenditure. Yet such moves would be foolhardy. Why?

Well, increases in capital gains tax would act as a deterrent to the entrepreneurial ism we desperately need to revitalise the economy. It would make many entrepreneurs think twice about setting up a business in the UK for fear of being taxed to the hilt when they eventually come to sell it – part or whole.

POLITICALLY toxic,’ was the reaction of Andy Bell, founder of wealth platform AJ Bell, to fears that CGT hikes are around the corner. Coincidentally or intentionally, he followed this comment by selling a £17 million stake in his business, although it still leaves him with a holding worth £430 million.

As for reductions in tax relief on pension contributions, they would merely discourage millions of people from saving for their retirement. In other words, a counterproductive move.

If there were a new tax introduced by Sunak that would be tolerated by a majority of people, it would be one to fund social care. Successive governments have shamefully sidestepped much-needed reform of the sector. It’s now time Sunak bit the bullet and came up with a solution, thereby delivering on the Prime Minister’s promise last year to ‘fix the social care crisis once and for all’.

Once again, a happy New Year. The good times are just around the corner.