The Budget And What It Means For Your Finances

The budget, announced by Rachel Reeves in late October 2024, set out plenty of new policies that will have a big impact on UK household finances. The actual budget itself is long and complex, so we’ve simplified it for you. We looked at what the economy is like now and what might happen next. In this article, we’ll cover how these changes could affect you.

The Current Economic Situation

As of November 2024, the economy is struggling compared to the same period last year – we’re all feeling the pinch. Direct debit failures are 3% higher than in 2023, with 18–35-year-olds struggling the most, with a direct debit failure rate of 7%.

Prices are rising faster than last year, meaning things are costing more. But our wages aren’t increasing, so it is becoming harder and harder for some to make ends meet.

See below the latest stats from the household saving ratio.

Household spending: In September 2024, the average monthly household spend on bills and outgoings was £1,533.80, a 5.4% increase from September 2023. 

Household savings ratio: In the first quarter of 2024, the household savings ratio was 11.3%, the highest it's been since the second quarter of 2021. 

The increase in prices and stumped wage growth are causing people to fall behind with payments.

Why Is It Important To Keep Up With Payments?

If you miss payments or direct debits fail, it could lead to a default or County Court Judgement (CCJ). A CCJ is a formal legal decision that says you haven't paid a debt. This can really damage your credit score, making it harder to borrow money in the future.

A bad credit score can make it difficult to:

• Get a mortgage
• Get a loan
• Rent a property
• Get a credit card

It's important to avoid CCJs if possible. If you're struggling to pay your bills, talk to your creditors as soon as possible. They may be able to help you set up a payment plan.

As you can see, the UK economy isn’t in the best of shapes, which pushed Rachel Reeves and Labour to make some bold calls in their Autumn budget 👇.

The Main Talking Points From The Budget

There was plenty to talk about following the budget. We’ve taken a look at some of the headlines below:

• National Minimum Wage to increase, bringing in an extra £1,400 a year for those on minimum wage.
• Only 15% of Universal Credit can be taken for debt repayment. Before the budget, this was 25%.
• A savings scheme for low-income earners. If you put away a small amount of money a year, the government will add 50% of the investment to your account.
• Thresholds that determine if you pay more income tax will be frozen until 2028.
• Road tax changes coming in 2025. As part of these changes, electric cars will now be charged the same as other cars, with luxury taxes in place for cars costing over £40,000.

All of these changes are set to shake things up, but how much will it impact you?

How The Budget Could Affect Your Finances

How the budget will impact you depends on your circumstances. If you are someone on lower pay, your finances will improve. Through National Minimum Wage increases you will feel the benefits of the budget more than others on slightly higher salaries. If you rely on public transport, you could see your average costs go up. The announcement to invest more in public transport will be largely funded through higher transport costs. As a driver, you are likely to feel the impacts of the budget the most. The upcoming changes to road tax in 2025 will likely increase the cost of driving, especially if you have an electric vehicle. You might be working out your annual budget or are considering a new car, take into account how much your car tax will be before making any major decision.

It goes without saying that if the budget succeeds the economy will too, but it’s easier said than done. No matter what happens, we’ll always be on hand to help you.

Our Support For You

We understand that finances can change, that’s why we have multiple support mechanisms in place for our customers:

• Breathing space if you need some time to think things over.
• Reduced payment arrangements in the short term. If you have a sudden issue and finance gets put on the back burner, we can reduce your payments for a short time to give you ease.
• Our agents are trained in spotting signs of vulnerability, helping get to your issue early before it turns into a more serious problem.
• We will be in regular contact with you during your support period to make sure you are getting the help and guidance you need.