🔪Tax Cuts Are Comin'

This is The Hedge, the newsletter that gives you more time to drink your coffee every Thursday morning.

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• Prices accurate as of approximately Wednesday 8:30PM BST.

🏠 Friday Mini Budget

This Friday new Liz (no, the other one) is going to be releasing a 'mini budget' which outlines her plans to give the UK economy a kick up the ass.

As is always the way with these things, the details have been 'leaked' to gauge public opinion and give her a chance to change the script before copping a load of shit from the public.

That means we already have a pretty good idea on what these announcements are going to be. Most of the ones you're going to actually care about are related to tax.

Stamp DutyThere's been some rumours that stamp duty for property will be cut. Right now that's literally all that has been leaked. We don't know how much, if it will be permanent or temporary or whether it will apply to canal boats.

Well, we probably do know the answer to the last one.

Income Tax ChangesThe plan announced by Rishi Sunak was for the Basic Rate of income tax to go down from 20p to 19p in 2024, and Truss is expected to bring this forward to 2023.

This will make a difference to many people, but the biggest change that has been suggested is the increase of the Higher Rate tax band from £50,270 to £80,000.

That's massive. It would mean a £6,000 saving for people earning over £80,000. Some would argue this is giving the biggest tax cuts to the wrong people.

She's also expected to scrap the Social Care Levy from National Insurance, which is going to save us all a chunk of change as well.

Here's how it will impact various earnings brackets:

Of course the question that will be raised is how the improvements to social care and ever increasing government costs more generally are going to be funded. I'm sure there'll be some bullshit calculations that will somehow show the France will actually be paying for it all.

The real answer is that they'll just borrow/print more money.

💷 Pound Hits 37-Year Low

The pound continues to cack itself agains the US dollar and hit its lowest level since 1985 today. Damn.

We've talked about the ramifications of this a bit before. It can potentially be quite good for FTSE listed companies, given that many of them are global businesses that generate profits from operations overseas.

With a falling pound, every $100 they earn overseas is worth a bit more in sterling when they bring it back, which can bolster the books. Of course, these companies aren't stupid and currency can go against them just the same.

Because of this, a lot of them will have hedged this currency risk, meaning the outcome might not be that dramatic. Not all of them though.

Obviously for holidaymakers it means US holidays will be a bit more expensive, but if you can afford a trip to New York or Florida then you're probably doing alright.

🌏 Snippets

• The Bank of England is definitely going to raise rates today, with some suggesting the biggest rate hike in 33 years is on the cards.

• This follows the US where the Fed has hiked rates to their highest levels since before the 2008 financial crisis.

• Supermarkets are (rightly) copping shit for not dropping their fuel prices in line with wholesale reductions.

• Volvo's new cars will have cameras that can detect if drivers are falling asleep or on their phone.

See you next week 🚀

Jason