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A Deal with the DUP: What now for your finances?

Making sense of the June Election

It’s been just over three weeks since UK voters took to polling stations and cast their votes on June 8th – a snap election which took place three years earlier than scheduled. This was called for by PM Theresa May in what was largely an effort to strengthen her hand in Brexit negotiations. What we saw however was a surprising result, one which neither the Conservative government or the financial markets had anticipated.

 

Coming out with a net loss of thirteen seats, the Tory party failed to secure a larger parliamentary majority as it had intended. Instead, the Labour party made a net gain of 30 seats, and the unexpected outcome drove the Conservatives to seek support from Northern Ireland’s Democratic’s Union Party (DUP) in order to successfully form a Government.

 

After five days of talks, news broke last week that the Conservative party had secured the DUP support that it required. This came in the form of a deal between the two parties, one that so far has not been short of criticism.

 

What this means for personal finances

While the market reaction and general economic climate will play significant roles in shaping the outlook for personal finances, these are some key policy changes that have emerged following the DUP deal.

 

Plans originally set out in the Conservative manifesto to replace the state pension ‘triple lock’ guarantee with a ‘double lock’ system have been scrapped. Currently the triple lock protects state pensions by guaranteeing an annual increase of at least 2.5%. This is a costly measure but remains popular versus the Tories proposed double lock alternative which would have allowed for an annual rise in line with the highest of either inflation or earnings growth.

 

Similarly the introduction of means testing for Winter Fuel Payouts has been dropped. Currently millions of elderly people are entitled to £300 a year to help with their heating bills. Means testing would have restricted this payment to those classed as living in ‘fuel poverty’- or in other words anyone spending more than 10% of their income to heat their home to what’s deemed as an adequate standard.

 

These are of course just a couple of aspects, and we are bound to see further developments as the newly formed Government gets to work. We’ll do our best to deliver more news and analysis as it comes!


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