What happens if Boris Johnson becomes Prime Minister?

Update 23/07/19 12:08 pm — Boris Johnson becomes UKs next Prime Minister

Love him or loathe him, after today’s vote, there’s no getting away from the fact that Boris Johnson is the front-runner to become the next man for the top job. If he does become our Prime Minister, what could his plans and policies mean for you and your money?

First off, what plans and policies has Boris Johnson spoken out about?

1. He has not ruled out a no-deal Brexit
2. He has said he’ll raise the lower threshold of the 40% tax band from £50,000 to £80,000
3. He wants to cut corporation tax

What could a no-deal Brexit mean for your day-to-day?

Although Boris has said he’s committed to delivering Brexit with a deal, he hasn’t taken a no-deal Brexit off the table.

What does that mean for the weekly shop?

No one is totally clear what leaving the EU without a deal looks like in practice because it’s never happened before. One area where there’s a bit more clarity is how it could affect the price of food.

As a member of the EU, the UK pays less tax to import food than countries outside. In a no-deal situation there’s no guarantee the UK would get the same deal. This could increase the price of importing food. If food is more expensive to import, supermarkets could pass the bill onto customers and charge us more.

Mark Carney, Bank of England governor has said that in the worst case scenario food prices may rise by up to 10%. To put that into perspective, your £50 weekly food shop would look more like £55.

The government has said a no-deal Brexit won’t lead to food shortages, but panic-buying by the public could. Some supermarkets have turned to stockpiling food as a solution but this isn’t possible for some fresh produce, so it’s possible that we might see shortages of fruit and veg.

What would Boris’s tax policies mean for you?

Currently in the UK people pay 20% income tax on what they earn up to £50,000 and 40% on everything over that. But Boris wants to raise this threshold to £80,000.

What will it mean for what I earn?

You could pay 20% less income tax on everything you earn above £50,000. So if you earned £60,000 a year, under Boris’s proposed tax rules you could potentially see your take-home pay increase by £1,000 a year.

It’s important to remember that this tax break will only affect those earning above £50,000. The average salary in the UK is about £29,000 so although it’s good news for some, most people wouldn’t feel the benefit.

What about mortgages, investments and pensions?

Our mortgages, investments and pensions are all affected by changes in the economy. If the economy is unhealthy, like it was when the credit crunch hit in 2008, our investments and pensions can lose money and banks tend to be more cautious with lending, so it’s harder to get a mortgage.

In general, having a Prime Minister in power is better for the economy than not. Not having a leader, or not having a leader with strong support, can rock investor confidence in British companies and our currency. If investment slows down it causes a slump in the economy.

So having a Prime Minister with support tends to be better for our money than not.

But what about Bo-Jo specifically?

Some of the policies that Boris has spoken out about could have a big effect on our economy.

1. Boris wants to reduce corporation tax. This could mean the UK becomes a more attractive country to invest in, which may have a positive effect on the economy. This positivity could rub off onto the money we have in savings, investments and pensions. But if the government is receiving less in corporation tax, there’s a chance there could be less in the pot for things like our NHS and schools.
2. Boris has committed to delivering on Brexit even if, as a last resort, that means we leave without a deal. Leaving the EU without a deal in place is likely to have a negative effect on the economy. No one is 100% sure what a no-deal situation would mean for the laws and rules the UK is governed by, which creates an uncertain political environment. And if there’s one thing investors don’t like — it’s extreme uncertainty. So a no-deal situation could rock their confidence in British companies and our currency, causing a slump in the economy.

Remember, no-one can ever be certain about the effect of any given Prime Minister on the economy and our money, because no one can see into the future (yet). Team Multiply have put their thinking caps on to share our best guess based on our experience.