The coronavirus pandemic is costing the government £ hundreds of billions and globally many trillions. This will all have to be paid for. Governments are simply borrowing and printing money to cover costs to keep people and businesses going as well as funding hospital and medical costs. There will be even more costs involved in getting people back to normal life with work, with vaccines, treatments and kick starting economies.
Make no mistake, this is the biggest economic hit since World War II and it will have to be paid for.
Expect higher taxes and social security contributions, expect new taxes, expect other tax breaks to be reduced. Expect inflation – governments do sometimes use higher inflation as a tool to devalue government debt without ever repaying it.
You need to look at your budget and plan now for having less spare, available, spendable income. Do not forget through the 60s, 70s and early 80s, basic rate income tax was 30% not the 20% it is today. Inflation was much higher in the 70s and 80s too.
Start making changes now, start planning for lower available income. If you had 10% or 20% less each month, where would you make cutbacks?
Make no mistake, a pay cut or financial ‘hair cut’ is on its way.