UK prime minister Burnham announces VAT cut from energy bills to bring down cost of living

<p class="text-align-justify" style="text-align: justify;">Burnham a man with a plan? Or is this just a move to try and bolster popularity early on in his tenure?</p><p class="text-align-justify" style="text-align: justify;">In his first notable policy action in charge, he has scrapped VAT on energy bills starting from 1 October. The move will cost roughly £850 million and be funded through the now cancelled digital ID scheme. For some context, the previously proposed digital ID scheme was estimated to cost approximately £1.8 billion over the coming years.</p><p class="text-align-justify" style="text-align: justify;">"I said I wanted to give people breathing space, and that's what I'm announcing on my second day as prime minister. We're taking immediate action to cut taxes on energy bills, put more money in people's pockets and bring back hope."</p><p class="text-align-justify" style="text-align: justify;">At the moment, it seems that this will be funded for just one year and it will be a cut for every household - regardless of wealth. The measure is estimated to reduce average annual household bills by roughly £45 ahead of the winter Ofgem price cap adjustment.</p><p class="text-align-justify" style="text-align: justify;">In terms of the potential impact on consumer price inflation (CPI), the early estimates are saying that this will take 0.1% off CPI.</p><p class="text-align-justify" style="text-align: justify;">Well, if this was an unfunded policy announcement, it will be interesting to see how the gilts market reacts later. But by scrapping the digital ID scheme, that at least takes away some of the fiscal risks involved.</p><p class="text-align-justify" style="text-align: justify;"></p>

This article was written by Justin Low at investinglive.com.

This article was sourced from Forexlive. WealthWire aggregates financial news for informational purposes only. This does not constitute investment advice.