March 2022

Mark Leale, Head of Quilter Cheviot Dubai Office and Senior Executive Officer


A key feature of the forthcoming UK Budget will be the extent to which Chancellor Rishi Sunak attempts to tackle the rising cost of living, with Russia’s invasion of Ukraine exacerbating an already challenging inflationary environment. Structurally tight energy markets were already causing higher prices but the recent events in Ukraine, and the concomitant surge in commodity prices, have amplified the issue. 

While Covid-19 has dominated the last two spring statements, it is expected to play a smaller role here. Numerous and sizable stimulus measures to mitigate the economic impact of the pandemic have been the central feature of recent budgets. And though the virus remains prevalent, the current adverse economic impact has fallen considerably compared to previous statements.  

In fact, the greatest Covid-related impact this time will be how the Treasury seeks to set about recouping some of its outlays on support measures, with an increase in national insurance and dividend tax expected to be announced. Tax hikes are notoriously unpopular but will be even less palatable given soaring energy costs. 

Household bills are already on the rise and could rise significantly further once the existing price cap is lifted later in the year. Fuel prices in the UK recently hit record highs with the average price for a litre of petrol rising above £1.60 for the first time, while Diesel topped £1.70. Unsurprisingly, there is growing pressure on the Chancellor to reduce fuel duty, especially given the VAT windfall generated by rapidly rising prices at the pumps. 

Another important aspect of the budget is expected to be the greater fiscal drag that would result from the freezing of income tax bands and allowances. Inflation and income growth will therefore move more taxpayers into higher tax brackets, providing an increased take for the Treasury’s coffers. This would come as real wages are set to continue falling, with the consumer price index recently hitting a 30-year high and outstripping an increased pace of wage growth.

Investors should remember that the value of investments, and the income from them, can go down as well as up. Investors may not recover what they invest. Past performance is no guarantee of future results.


This is a marketing communication and is not independent investment research. Financial Instruments referred to are not subject to a prohibition on dealing ahead of the dissemination marketing communications. Any reference to any securities or instruments is not a personal recommendation and it should not be regarded as a solicitation or an offer to buy or sell any securities or instruments mentioned in it.

Any mention of a specific security should not be interpreted as a solicitation to buy or sell a specific security.

Quilter Cheviot Limited is registered in England with number 01923571. Quilter Cheviot Limited: is a private limited company, registered in England with number 01923571, whose registered office is Senator House, 85 Queen Victoria Street, London, EC4V 4AB, United Kingdom; is a member of the London Stock Exchange; is authorised and regulated by the UK Financial Conduct Authority; has established a branch in Jersey, and is regulated under the Financial Services (Jersey) Law 1998 by the Jersey Financial Services Commission for the conduct of investment business and funds services business in Jersey, and by the Guernsey Financial Services Commission under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 to carry on investment business in the Bailiwick of Guernsey; has established a branch in the Dubai International Financial Centre with number 2084 which is regulated by the Dubai Financial Services Authority. Accordingly, in some respects the regulatory system that applies will be different from that of the United Kingdom.