In the UK, over the course of October, increasing attention was given to the inaugural budget of the newly elected Labour party. With suggestions that revenue raising was needed, the media speculation over potential tax rises was intense. Inevitably, only a handful of the feared tax increases were made, leading to some relief. Indeed, the AIM market which was at risk of losing inheritance tax reliefs, rallied sharply following the statement as 50% of the tax break was retained. It is clear that a significant amount of cash had been waiting on the sidelines ahead of the event.

The main tax changes included:

• A 1.2% increase in Employers national insurance contributions, from 13.8% to 15%, and a lowering of the threshold to £5,000. Although this was offset by reliefs for smaller businesses.

• An increase in the minimum wage ahead of inflation. This, taken together with the NI increase will mostly impact large employers of lower paid workers.

• Capital gains tax rate increase. Higher rate CGT tax increased from 20% to 24%.

• Pensions will now be subject to Inheritance tax (with the threshold also frozen).

• IHT relief on AIM shares and agricultural assets cut to 50% (with some additional allowances)

• Second home Stamp Duty surcharge increased to 5%.

Taken together, the burden of these changes will fall mostly on businesses and wealthier asset owners initially. However, increases in employer’s national insurance will implicitly impact worker’s pay going forwards as businesses count the cost of the additional tax on employment. The Office of Budget Responsibility looked favourably on plans for greater government capital investment, increasing expected growth rates (and therefore tax revenues). There will therefore be pressure for the government to deliver investments that can generate this extra growth, setting up an area for scrutiny at future budget events. Delivering growth is now essential, to provide for a virtuous circle of higher revenues. Failure will lead to a more rapid increase in the overall debt burden.

Looking forward, early November will see the long anticipated US Presidential election take place. Current predictions favour Donald Trump (67% probability), supporting a broad rise in the equity market. This is in anticipation of a generally lower tax, lower regulation environment, when compared to his rival Kamala Harris. However, the market is now set up for a fall, should Donald Trump fail to win. As usual with US elections, the outcome will be dependent on a handful of swing states, rather than the popular vote. This makes the outcome harder to predict and as always will polling there is always a margin of error. Banking on one outcome is therefore unwise.