WEBVTT - Daybreak Weekend: Delta Earnings, UK Tax Season, China Data 0:00:00.240 --> 0:00:07.720 Bloomberg Audio Studios, Podcasts, radio News. 0:00:10.600 --> 0:00:13.520 This is Bloomberg Daybreak Weekend, our global look at the 0:00:13.520 --> 0:00:15.840 top stories in the coming week from our Daybreak anchors 0:00:15.880 --> 0:00:18.279 all around the world. Straight Ahead on the program, we 0:00:18.320 --> 0:00:21.440 look to how airlines could fare going forward. I'm Nathan 0:00:21.480 --> 0:00:22.640 Hager in Washington. 0:00:22.800 --> 0:00:25.520 I'm Caroline Hepke in London, where we're looking ahead to 0:00:25.600 --> 0:00:29.280 a raft of tax changes in the UK at the 0:00:29.320 --> 0:00:31.280 start of the new financial year. 0:00:31.520 --> 0:00:34.440 I'm Doug Krisner, looking ahead to the latest price reports 0:00:34.479 --> 0:00:38.040 for China and whether deflation is at a turning point. 0:00:38.400 --> 0:00:42.440 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:42.479 --> 0:00:46.160 eleven three year, New York, Bloomberg ninety nine to one, Washington, DC, 0:00:46.680 --> 0:00:51.800 Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Syrias, 0:00:51.960 --> 0:00:55.480 XM one twenty one, and around the world on Bloomberg Radio, 0:00:55.520 --> 0:00:57.720 dot Com and the Bloomberg Business App. 0:01:02.640 --> 0:01:05.280 Good day to you. I'm Nathan Hager. We begin today's 0:01:05.319 --> 0:01:09.000 program in the air earning season gets underway this week, 0:01:09.040 --> 0:01:13.560 with Delta Airlines reporting its latest results on Wednesday. For 0:01:13.640 --> 0:01:15.720 more on this and what to expect for the airline 0:01:15.760 --> 0:01:20.039 industry as a whole. We're joined by George Ferguson, senior Airspace, 0:01:20.120 --> 0:01:24.080 Defense and Airlines analyst for Bloomberg Intelligence. George, it's great 0:01:24.080 --> 0:01:27.280 to speak with you ahead of the results from Delta. 0:01:27.319 --> 0:01:30.960 How much could we see the outlook for this airline 0:01:31.200 --> 0:01:33.720 affected by what we've seen over the last month of 0:01:34.000 --> 0:01:34.800 war with Iran? 0:01:36.720 --> 0:01:39.400 So thanks for having me on. I think that a 0:01:39.440 --> 0:01:43.280 lot of the outlook and a lot of investor perspectives 0:01:43.400 --> 0:01:47.120 on the airline will be a function of that war 0:01:47.640 --> 0:01:51.320 in Iran and where it's at when earnings are reported. 0:01:51.840 --> 0:01:55.760 How so, So I mean, you know, right now, I 0:01:55.800 --> 0:01:57.960 think we're looking at a scenario where the streets are 0:01:58.000 --> 0:02:02.960 Humus look effectively closed, right. I don't think they're physically closed, 0:02:03.400 --> 0:02:06.800 but they look effectively closed, and the US may walk 0:02:06.800 --> 0:02:10.160 away from the region without reopening it. Some of the 0:02:10.200 --> 0:02:13.120 rhetoric are hearing, you know, out of the Trump administration now, 0:02:13.760 --> 0:02:18.840 and so that is obviously going to play into where 0:02:18.880 --> 0:02:22.160 fuel prices are going. Right, So I think as investors 0:02:22.200 --> 0:02:24.880 go into those earnings, I think, you know, one queue 0:02:24.960 --> 0:02:26.920 is just not going to matter as much. We know 0:02:27.000 --> 0:02:31.400 fuel prices spiked, it's typically a week quarter, so you're 0:02:31.400 --> 0:02:34.320 not going to spend a lot of time parsing those numbers. 0:02:34.360 --> 0:02:37.200 My guess is that Delta will do a lot of 0:02:37.200 --> 0:02:40.400 work to try to keep those earnings kind of in 0:02:40.440 --> 0:02:45.080 a decent place by economizing on maintenance and things like that. 0:02:45.480 --> 0:02:47.720 But again, investor is going to be really focused on 0:02:48.480 --> 0:02:51.440 down the road. We're coming into summer travel season two 0:02:51.560 --> 0:02:55.520 Q and three Q, and so if the price of 0:02:55.600 --> 0:02:59.160 fuel remains high and even potentially goes higher because the 0:02:59.160 --> 0:03:02.040 Straits are removes or closed and the US is pulling 0:03:02.040 --> 0:03:05.360 out of the region, I think that you know, that 0:03:05.560 --> 0:03:09.840 sets up a different demand dynamic for the summer, right. 0:03:10.360 --> 0:03:17.240 I think that Delta's got a fairly well heeled flying 0:03:17.400 --> 0:03:22.040 clientele that can manage an increase in prices twenty thirty 0:03:22.040 --> 0:03:25.560 percent for tickets, But there will be some demand that 0:03:25.600 --> 0:03:30.000 peels away, and so then the dance comes between size 0:03:30.040 --> 0:03:34.640 and capacity correctly for what the new demand is in 0:03:34.680 --> 0:03:37.720 a higher ticket price environment. Or if the US pulls 0:03:37.720 --> 0:03:40.520 away from the Straits and the Iranians say, look, there's nobody, 0:03:41.080 --> 0:03:43.640 there's nobody here to blame anymore. The US is gone, 0:03:44.280 --> 0:03:49.119 We'll let tankers flow the global you know, oil prices 0:03:50.200 --> 0:03:54.200 returned to sort of prewar level or at least you know, 0:03:54.320 --> 0:03:57.640 descend a bit, don't continue to climb. You'll have a 0:03:57.720 --> 0:04:01.240 much better outlook for so or flying season. So I 0:04:01.240 --> 0:04:08.400 think everything everything rides on what the outcome of the 0:04:08.880 --> 0:04:12.440 Iran sort of you know, war or fight, whatever you 0:04:12.440 --> 0:04:16.960 want to call it, is into two Q and three Q, 0:04:17.560 --> 0:04:20.640 and I think that's how investors will We'll look at 0:04:20.680 --> 0:04:23.520 earnings and look at guidance through that lens. 0:04:24.120 --> 0:04:27.840 Given that demand picture you just mentioned, the focus on 0:04:27.920 --> 0:04:30.480 the premium traveler, does that put Delta in a better 0:04:30.480 --> 0:04:35.080 position compared to some of the other major carriers, So. 0:04:35.080 --> 0:04:37.480 We think so, right, We think that United in Delta 0:04:38.040 --> 0:04:42.400 and to a lesser extent American have passengers, have client 0:04:42.440 --> 0:04:46.320 tele that are going to want to travel despite changes 0:04:46.360 --> 0:04:49.560 in prices. Right, So, I mean if fuel prices rise 0:04:49.600 --> 0:04:52.040 by one hundred percent, which is kind of you know 0:04:52.240 --> 0:04:56.640 where we were here as we closed out one Q. Look, 0:04:56.680 --> 0:05:00.279 you know, typically these carriers twenty to thirty percent percent 0:05:00.560 --> 0:05:03.680 of revenues to be consumed by fuel. So maybe the 0:05:03.680 --> 0:05:06.520 way to think about it is that means that ticket 0:05:06.520 --> 0:05:11.120 prices have to rise by what maybe twenty or thirty percent. 0:05:11.560 --> 0:05:15.039 If you're you know, a fairly wealthy client, You're not 0:05:15.040 --> 0:05:17.279 going to let twenty to thirty percent increases in in 0:05:17.320 --> 0:05:20.040 your ticket price, right, five hundred to six hundred dollars 0:05:20.080 --> 0:05:23.719 maybe to go to the West Coast, maybe maybe one 0:05:23.800 --> 0:05:25.680 thousand to twelve hundred dollars to go to Europe. You're 0:05:25.680 --> 0:05:27.600 not going to let that get in the way of 0:05:27.640 --> 0:05:31.080 your travel plans. The people whose travel plans will get 0:05:31.240 --> 0:05:34.760 interrupted by that are more of the basic economy traveler, 0:05:35.320 --> 0:05:40.360 the travel that's probably flying you know, Spirit, Frontier, Jet Blue, 0:05:41.000 --> 0:05:45.080 these kind of carriers, And I think that will exacerbate 0:05:45.160 --> 0:05:48.400 this fight for the back of the airplane because because 0:05:48.560 --> 0:05:52.800 United and Delta are filling their airplanes with a bunch 0:05:52.880 --> 0:05:56.160 of premium travelers, but in the back of every United 0:05:56.160 --> 0:05:59.080 Airline flight or Delta Airline flight is a little bit 0:05:59.200 --> 0:06:03.359 of Spirit airline. It's a basic economy traveler, and the 0:06:03.400 --> 0:06:05.719 fight will go on to get them in the airplane 0:06:05.760 --> 0:06:08.120 at least to cover marginal costs. 0:06:08.560 --> 0:06:10.640 Thank you for this, George, again, great having you on 0:06:10.680 --> 0:06:14.000 with us. That's a Bloomberg Intelligence Senior Aerospace, Defense and 0:06:14.080 --> 0:06:17.880 Airlines analyst, George Ferguson. Let's take a look now at 0:06:17.920 --> 0:06:20.520 some stocks making news in the week ahead. I'm Nathan Hager, 0:06:20.640 --> 0:06:25.000 joined by Bloomberg Markets Live strategist Tatiana Daria. I guess 0:06:25.040 --> 0:06:27.560 we could say this is the unofficial start of earning 0:06:27.600 --> 0:06:30.400 season before the banks get things going right. We've got 0:06:30.400 --> 0:06:35.760 a few companies opening things up, including Constellation Brands on Wednesday. 0:06:36.320 --> 0:06:39.080 It's been a tough go for the booze business, hasn't it? 0:06:39.720 --> 0:06:44.040 Yes, exactly. Expectations aren't very high here for the company, 0:06:44.080 --> 0:06:47.159 but some analysts on Wall Street are starting to warm 0:06:47.240 --> 0:06:50.560 up to the stock on valuation concerns, saying that a 0:06:50.560 --> 0:06:53.120 lot of the bad news is already in the stock. 0:06:53.240 --> 0:06:57.080 So Bloomberg Intelligence forecast at net revenue will fall about 0:06:57.120 --> 0:07:02.040 fifteen percent do mainly to their whine and spirits portfolio devestments. 0:07:02.520 --> 0:07:07.279 But they're also anticipating some sluggishness in the beer segment, 0:07:07.320 --> 0:07:11.440 which is obviously their main driver or crown a jewel 0:07:11.520 --> 0:07:16.240 there and especially among Hispanic consumers. BI notes, but some 0:07:16.320 --> 0:07:19.120 analysts are saying that most of that is already in 0:07:19.120 --> 0:07:22.160 the price. Perhaps, you know, the beer segment has room 0:07:22.240 --> 0:07:26.960 to surprise to the upside. We've seen JP Morgan lifting 0:07:27.000 --> 0:07:30.920 their price target. We've seen Evercore adding the stock to 0:07:30.960 --> 0:07:35.200 the Tactical Outperformed list, and it also got an upgrade 0:07:35.200 --> 0:07:41.480 from City earlier this month, citing evaluation that's below historical levels, 0:07:41.520 --> 0:07:44.720 and if you look at the forward price to earnings ratio, 0:07:44.880 --> 0:07:49.080 it has indeed fallen drastically. It's hovering around the lowest 0:07:49.160 --> 0:07:53.280 since twenty twelve now as shares have come down sharply 0:07:53.320 --> 0:07:54.120 over the past year. 0:07:54.440 --> 0:07:59.000 Yeah, valuation concern certainly speaks to that. There before we 0:07:59.080 --> 0:08:01.720 hear from constantly, we're going to get results as well 0:08:01.720 --> 0:08:05.440 from Levi Strauss on Tuesday. Of course, we got that 0:08:05.760 --> 0:08:09.240 big disappointment from Nike this past week. Do you put 0:08:09.600 --> 0:08:12.880 Levi in the same category as Nike in terms of 0:08:12.880 --> 0:08:13.880 what to expect there? 0:08:14.240 --> 0:08:17.000 I think one has to, right because they both speak 0:08:17.160 --> 0:08:21.560 to the consumer. They're both sort of discretionary brands that 0:08:21.640 --> 0:08:24.720 you turn to for sort of luxury and comfort, not 0:08:24.800 --> 0:08:30.400 necessarily because you really need to. And expectations are pretty 0:08:30.560 --> 0:08:34.840 I would say modestly positive. Ubs, for example, expects a 0:08:35.040 --> 0:08:38.960 fourth quarter sales and EPs beat, though they say the 0:08:39.040 --> 0:08:43.080 company may remain cautious on a full year outlook amid 0:08:43.280 --> 0:08:46.920 the macro as certainly, just like we've seen with Nike, 0:08:47.360 --> 0:08:50.160 they know that the US direct to consumer sales likely 0:08:50.240 --> 0:08:53.040 rose about two percent year over year, and that web 0:08:53.080 --> 0:08:56.400 traffic likely increased even more in the US according to 0:08:56.520 --> 0:09:01.280 their industry data that they track. Nonetheless, the company may 0:09:01.360 --> 0:09:05.080 choose to just be cautious and conservative and not raise 0:09:05.120 --> 0:09:09.559 their guidance despite the likely beat. And that's because of 0:09:09.600 --> 0:09:12.559 the reasons that we have seen with the Nike report, 0:09:12.679 --> 0:09:16.839 with potential fresh setbacks in Europe and the Middle East, 0:09:17.360 --> 0:09:21.439 regions that are obviously heavily exposed to the energy costs 0:09:22.000 --> 0:09:24.600 and just the disruptions coming from the year round war. 0:09:24.920 --> 0:09:27.720 Now, were you expecting any further commentary from Levi around 0:09:27.800 --> 0:09:30.880 how they're dealing with trade uncertainty as well after that 0:09:31.200 --> 0:09:35.240 Supreme Court tariff decision and some of the uncertainty around 0:09:35.679 --> 0:09:38.160 how the president might try to rebuild that terrafall and 0:09:38.200 --> 0:09:39.600 how that could affect its business. 0:09:40.440 --> 0:09:44.600 Yes, certainly, you know, tariffs is sort of fallen off 0:09:44.640 --> 0:09:48.800 the radar, but when you look at company earnings, especially 0:09:48.840 --> 0:09:52.720 in the consumer space, it is still a big focus. 0:09:53.160 --> 0:09:56.440 So it will be really interesting to see what the 0:09:56.480 --> 0:09:58.120 company has to say on that matter. 0:09:58.400 --> 0:10:02.800 Yeah, and of course earnings take off with Delta Airlines 0:10:02.920 --> 0:10:05.560 on Wednesday. What kind of a stock move could we 0:10:05.679 --> 0:10:07.920 see following those results? Ta Tiana. 0:10:08.080 --> 0:10:11.480 Well, what it's interesting with Delta Air is that they 0:10:11.920 --> 0:10:14.640 kind of have been the exception among the airlines. It 0:10:15.200 --> 0:10:19.240 is the only airlines stock bucking the weakness among major 0:10:19.280 --> 0:10:22.199 peers since the war started. If you look at an 0:10:22.200 --> 0:10:26.600 index of an industry index, that index has fallen into 0:10:26.640 --> 0:10:30.720 a bear market recently, but Delta shares have actually gained 0:10:30.840 --> 0:10:34.920 three percent since the war started. And maybe because the 0:10:34.960 --> 0:10:38.560 company has already set a positive tone for its earnings 0:10:38.600 --> 0:10:42.360 report after issuing a more optimistic sales target at a 0:10:42.400 --> 0:10:46.439 recent conference, saying that bookings for leisure and corporate customers 0:10:46.480 --> 0:10:50.680 accelerated into March. Actually, and they say they are very 0:10:50.679 --> 0:10:54.200 well positioned to navigate the current environment at the time 0:10:54.760 --> 0:10:59.240 when elevated fuel prices are roiling the industry. And it 0:10:59.320 --> 0:11:02.599 looks like investors are giving Delta the benefit of the 0:11:02.720 --> 0:11:06.160 doubt here. But obviously things change very fast these days, 0:11:06.320 --> 0:11:09.040 so it will be interesting to see how their views 0:11:09.040 --> 0:11:12.600 have changed since they issued that update about two weeks 0:11:12.640 --> 0:11:13.439 for two weeks. 0:11:13.240 --> 0:11:15.720 Ago from now, yeah, absolutely, while we wait for updates 0:11:15.720 --> 0:11:18.680 around the war and how that could develop as well. 0:11:18.720 --> 0:11:22.120 I mean, what kind of changes could we see? What 0:11:22.160 --> 0:11:25.559 are you listening for, particularly from the call from Delta. 0:11:25.360 --> 0:11:30.760 Later on, I'll be listening on clues about the consumer 0:11:31.240 --> 0:11:37.880 right because obviously travel is a discretionary category. Most of 0:11:37.960 --> 0:11:40.680 us do it for fun, for vacations, So I'll be 0:11:40.720 --> 0:11:44.760 interested to see if they have seen a pullback from 0:11:44.880 --> 0:11:48.600 consumers specifically, because if you look at alternative data on 0:11:48.640 --> 0:11:51.640 the Bloomberg as it relates to that, yes, it showed 0:11:51.640 --> 0:11:55.600 that airline spending is hanging in there, but hotel spending 0:11:56.240 --> 0:12:01.000 has sort of fallen off here in recent so I'd 0:12:01.000 --> 0:12:03.880 be sort of curious to see how much is that 0:12:03.960 --> 0:12:04.960 impacting airlines. 0:12:05.000 --> 0:12:08.840 Already, here we go for earning season for Q one. 0:12:09.000 --> 0:12:13.199 Thank you for this, Bloomberg Markets Live Strategist Tatiana Daria, 0:12:13.400 --> 0:12:15.719 And coming up on Bloomberg day Break Weekend, we'll look 0:12:15.720 --> 0:12:18.920 ahead to the new tax year in the UK starting 0:12:18.960 --> 0:12:34.000 April sixth. I'm Nathan Hager, and this is Bloomberg. This 0:12:34.080 --> 0:12:36.920 is Bloomberg Day Break Weekend, our global look ahead at 0:12:36.920 --> 0:12:39.439 the top stories for investors in the coming week. I'm 0:12:39.480 --> 0:12:42.400 Nathan Hager in Washington. Up later in our program, we'll 0:12:42.400 --> 0:12:45.600 look to some key economic data in China. But first 0:12:45.679 --> 0:12:47.840 it is now the new tax year in the UK 0:12:48.040 --> 0:12:51.400 running from April, and it's about to bring major changes 0:12:51.440 --> 0:12:54.640 in taxation and employment rights. Many of them were announced 0:12:54.720 --> 0:12:58.480 last November by UK Chancellor Rachel Reeves. But they land 0:12:58.840 --> 0:13:02.680 just as Britain's growth outlook is deteriorating. Let's go to 0:13:02.760 --> 0:13:05.320 London and get more from Bloomberg day Break europe banker 0:13:05.400 --> 0:13:07.040 Caroline hepger Nathan. 0:13:07.080 --> 0:13:09.400 The tax here in Britain begins on the sixth of 0:13:09.440 --> 0:13:11.679 April and twenty twenty six is going to bring in 0:13:11.760 --> 0:13:16.360 a lot of changes for workers, employers, landlords, business owners 0:13:16.480 --> 0:13:20.920 and investors. The Employment Rights Act starts to come into force. 0:13:20.960 --> 0:13:24.600 That's the biggest change in employment law in decades, designed 0:13:24.600 --> 0:13:28.320 to protect those in low paying or insecure jobs. Also, 0:13:28.360 --> 0:13:31.440 there are a number of tax increases due to tax 0:13:31.559 --> 0:13:36.160 thresholds to dividend and capital gains tax changes. All of 0:13:36.200 --> 0:13:39.640 this part of the Chancellor's so called Smallger's Board budget 0:13:40.000 --> 0:13:43.200 from last autumn. Plus there's an increase in the state 0:13:43.280 --> 0:13:47.600 pension age and higher welfare payments for retirees, people on 0:13:47.679 --> 0:13:50.840 low income, those out of work were unable to work. 0:13:51.200 --> 0:13:54.559 But will it help Britain's economy and workers. Do you 0:13:54.600 --> 0:13:54.920 know what I mean? 0:13:54.960 --> 0:13:55.040 Now? 0:13:55.080 --> 0:13:59.160 As John Steppeck, editor of Bloomberg's award winning Money Distilled newsletter, 0:13:59.559 --> 0:14:03.240 there are so many changes John, that are coming in 0:14:03.280 --> 0:14:06.599 this new financial year in Britain that we're going to 0:14:06.679 --> 0:14:09.600 have to break them all down. So let's start first 0:14:10.200 --> 0:14:13.680 with the changes that are coming under the Employment Rights 0:14:13.760 --> 0:14:17.080 Act of twenty twenty five. This is the so called 0:14:17.520 --> 0:14:22.160 day one employment rights legislation from the Labor government. What 0:14:22.280 --> 0:14:24.560 does it involve and why is it being brought in? 0:14:25.320 --> 0:14:27.320 Well, this one, I mean, this has been brought in 0:14:27.560 --> 0:14:31.680 just to enhanced protections for work case. Now, whether you 0:14:31.840 --> 0:14:35.720 think that is necessary or whether you think we've already 0:14:35.840 --> 0:14:38.560 got in off, it's a different question that will depend 0:14:38.600 --> 0:14:42.920 your politics. But from April the sixth, we're getting day 0:14:42.960 --> 0:14:45.320 one rates to paternity leave. So at the moment you 0:14:45.360 --> 0:14:47.880 have to be with a company for twenty six weeks 0:14:48.200 --> 0:14:50.800 six months, that's been reduced to the FoST day. There's 0:14:50.880 --> 0:14:54.360 extended six p rates, so at the moment you're not 0:14:54.520 --> 0:14:57.800 due statutory sick p until the fourth day your illness. 0:14:58.040 --> 0:15:00.480 Let's all kick in from the FoST day now, to 0:15:00.520 --> 0:15:03.480 be fair enough, A lot of employers don't actually rely 0:15:03.560 --> 0:15:06.320 on statutory sick pay. It is something you just get 0:15:06.320 --> 0:15:09.200 paid your wage. But that's that's something that if your 0:15:09.240 --> 0:15:13.640 employer does that, and there's some tweaks to collective redundancy rules, 0:15:13.720 --> 0:15:16.160 so if they don't do that properly, they've kind of 0:15:16.200 --> 0:15:18.920 double the amount of time you can claim front fair dismissal. 0:15:19.800 --> 0:15:23.480 They've added sexual harassment to the whistle blowing guidelines. There's 0:15:23.560 --> 0:15:27.080 various bits and pieces. Some of the kind of punchier 0:15:27.160 --> 0:15:30.880 stuff has been delayed, I think partly because obviously employers 0:15:30.960 --> 0:15:33.120 need a bit more time to adjust. So one of 0:15:33.160 --> 0:15:37.360 the major things was, at the moment, you can be 0:15:37.440 --> 0:15:40.320 employed for up to two years and not be able 0:15:40.320 --> 0:15:43.040 to claim unfair dismissal. So in effect, you can you 0:15:43.080 --> 0:15:45.120 can need someone out the door if they're not working 0:15:45.840 --> 0:15:48.480 without having to go through that kind of massive process. 0:15:48.800 --> 0:15:51.240 That's going to get reduced to six months. And that 0:15:51.280 --> 0:15:54.000 was one of the more controversial changes because you know, 0:15:54.400 --> 0:15:59.040 it's it will make life more complicated hiring wise. But 0:15:59.200 --> 0:16:00.960 that yeah, so that's why be had at the moment. 0:16:02.120 --> 0:16:05.040 Yeah no, so yeah, so that's what's kicking in for me. 0:16:05.080 --> 0:16:07.000 April the sixth Yeah, So that's in terms of the 0:16:07.080 --> 0:16:11.240 Employment Rights Act, which trade unions like the TUC and 0:16:11.320 --> 0:16:13.920 others see as benefiting workers in terms of their health 0:16:14.160 --> 0:16:18.680 and they're wellbeing. As for the other major tax changes, 0:16:18.800 --> 0:16:23.000 so we know that income taxes are going to effectively 0:16:23.040 --> 0:16:26.400 go up because of fiscal drag, right, so we have 0:16:26.480 --> 0:16:29.280 to think about that in terms of the tax changes 0:16:29.320 --> 0:16:30.240 as being a big one. 0:16:30.360 --> 0:16:30.560 Yeah. 0:16:30.560 --> 0:16:32.880 I think that's really important, and I'm glad you brought 0:16:32.880 --> 0:16:37.520 that up because nothing's changed technically, but that's the basic problem. 0:16:37.840 --> 0:16:40.600 So if you've had a pay raise that is ce 0:16:40.720 --> 0:16:44.280 has gone up with inflation this year, then that means 0:16:44.320 --> 0:16:47.320 that your wages obviously have gone up. But the problem 0:16:47.400 --> 0:16:49.800 is that fiscal drag means the income tax, So the 0:16:49.880 --> 0:16:52.880 income tax thresholds have been frozen, so it means that 0:16:53.440 --> 0:16:56.360 for every extra pound that you get, you're being put 0:16:56.360 --> 0:17:00.520 anty a different tax bracket effectively. So the moment you 0:17:00.520 --> 0:17:02.960 can add up to twelve five hundred and seventy pounds 0:17:03.000 --> 0:17:06.160 and that's your personal allowance, above that you pay twenty 0:17:06.200 --> 0:17:09.840 percent tax. Above fifty two hundred and seventy you pay 0:17:09.880 --> 0:17:12.320 forty percent tax, and then above one hundred and twenty 0:17:12.359 --> 0:17:16.159 five one forty you pay forty five percent tax. The 0:17:16.200 --> 0:17:19.240 point is that's been frozen for several years now, so 0:17:19.400 --> 0:17:22.680 more and moarriors are getting dragged into higher rate tax bands. 0:17:23.080 --> 0:17:25.080 And then the kind of proportion of people who would 0:17:25.080 --> 0:17:29.440 once have been considered not to be high way journals 0:17:29.560 --> 0:17:32.600 like you know, nurseis people like that are increasingly being 0:17:32.680 --> 0:17:34.960 dragged more and more of them into the forty percent 0:17:35.000 --> 0:17:37.480 band and even a bit higher up. You know, some 0:17:37.520 --> 0:17:40.119 people are getting pulled into the forty five percent band 0:17:40.320 --> 0:17:43.240 they wouldn't once have been considered, you know, super wealthy, 0:17:43.440 --> 0:17:46.040 and that's just that's pure inflation. So it's a tax 0:17:46.119 --> 0:17:50.560 on inflation. Your living standard has not improved because your 0:17:50.600 --> 0:17:53.119 wages are buying you the same amount of stuff, but 0:17:53.200 --> 0:17:55.439 you're getting tax more on it. So actually, yeah, if 0:17:55.480 --> 0:17:57.600 you've only had an inflation pay rise, if you've even 0:17:57.680 --> 0:18:01.200 had an inflation pay rise this year, actually wash off. 0:18:02.000 --> 0:18:04.280 And so fiscal drag is pretty brutal, and there REases 0:18:04.320 --> 0:18:07.159 the government a good amount of money. Yeah, so I 0:18:07.160 --> 0:18:08.800 can see why the foind of it. 0:18:09.080 --> 0:18:13.439 Yeah, absolutely, So that's one big change. Then one that 0:18:13.480 --> 0:18:16.040 we've had more advertising is not a lot of advertising 0:18:16.080 --> 0:18:19.080 about a fiscal drive. But there is about this change 0:18:19.400 --> 0:18:24.159 which is making tax digital, which requires self employed workers 0:18:24.240 --> 0:18:27.800 and landlord to earn over a certain money through their 0:18:27.840 --> 0:18:32.720 business or through rental to keep more records. So there's 0:18:32.720 --> 0:18:36.159 going to be more frequent sort of interactions between you 0:18:36.280 --> 0:18:37.560 and the tax authorities. 0:18:37.720 --> 0:18:40.520 Yeah, so if you're doing over fifty thousand pounds as 0:18:40.560 --> 0:18:42.680 a soul trade or aligned lord, then you're going to 0:18:42.760 --> 0:18:46.120 have to start failing digitally. And I mean the big 0:18:46.160 --> 0:18:50.800 issue here is basically admin and a compliance button, so 0:18:51.040 --> 0:18:53.840 you have to get used to the software. The software costs, 0:18:53.880 --> 0:18:55.280 I mean, I kind of the last thing I saw 0:18:55.400 --> 0:18:58.680 was about four hundred to five hundred pounds. A lot 0:18:58.720 --> 0:19:01.879 of people will probably want to ask an accountant to 0:19:02.200 --> 0:19:04.440 sort this out for them because it's you know, it's 0:19:04.480 --> 0:19:09.320 a fave, And I guess the benefit is probably arguably 0:19:09.320 --> 0:19:12.800 mostly on the tax blank side. I mean, you could 0:19:12.920 --> 0:19:16.159 argue that it gives you proay slightly more visibility on 0:19:16.200 --> 0:19:18.240 what your tax bill is likely to be, but to 0:19:18.280 --> 0:19:20.840 be honest, if we keep half decent accounts should probably 0:19:20.840 --> 0:19:23.840 be on top of that already. I would say it's 0:19:23.920 --> 0:19:27.280 another compliance budden on small business more than it is 0:19:27.359 --> 0:19:30.160 a beneficial change. 0:19:30.840 --> 0:19:33.879 Overall, and this is only a few of the changes. 0:19:34.400 --> 0:19:37.560 Do we know how all of these changes are actually 0:19:37.560 --> 0:19:39.800 going to affect the economy? 0:19:40.440 --> 0:19:43.640 Well, the problem is, you can look at these changes, 0:19:44.280 --> 0:19:46.879 you can probably make a case on the basis of 0:19:47.000 --> 0:19:50.920 you know, fairness or particular interest group as to why 0:19:51.080 --> 0:19:52.760 or this is a good thing. You know, but this 0:19:53.400 --> 0:19:55.679 we should be doing this. We should be giving people 0:19:56.040 --> 0:19:58.359 poternality to leave from day one, all of that sort 0:19:58.359 --> 0:20:01.280 of stuff. The problem is, though, the you're starting to 0:20:01.520 --> 0:20:06.760 kind of push even more compliance costs onto Yeah, small 0:20:06.800 --> 0:20:10.080 businesses and large businesses, but large businesses are usually set 0:20:10.160 --> 0:20:12.520 up for this kind of thing already. They can swallow 0:20:12.560 --> 0:20:15.320 the costs. And you know, this is coming at a 0:20:15.320 --> 0:20:18.480 time when the labor market in the UK is kind 0:20:18.520 --> 0:20:22.520 of turning down, cooling off. We've already seen a massive 0:20:22.600 --> 0:20:26.159 kind of minimum wage. There's another one coming in at 0:20:26.160 --> 0:20:28.920 the same time. And you know, but we were saying 0:20:28.960 --> 0:20:31.399 kind of like young people struggling to get jobs basically 0:20:31.400 --> 0:20:36.200 because they are too expensive to hire. And I mean 0:20:36.200 --> 0:20:38.199 this is don't get me wrong, It's not just about that. 0:20:38.240 --> 0:20:41.440 We're also we've got a hangover from COVID still, so 0:20:41.600 --> 0:20:45.160 you know, during COVID. The labor market was massively disrupted 0:20:45.200 --> 0:20:48.600 because obviously the leisure industry was shut down and then 0:20:48.680 --> 0:20:51.800 it reopened and everyone had found other jobs elsewhere, so 0:20:51.880 --> 0:20:53.840 they had to hire, you know, and pay more to 0:20:53.920 --> 0:20:56.280 hire people at that point. And I think we're actually 0:20:56.320 --> 0:20:59.320 still going through that sort of like corrective phase now. 0:20:59.560 --> 0:21:01.800 The problem is making it very hard for anyone either 0:21:01.800 --> 0:21:03.760 getting out of UNI or it just wants a kind 0:21:03.800 --> 0:21:06.960 of part time job to find work because again it's 0:21:06.960 --> 0:21:11.320 become too expensive and this sort of extra compliance buton 0:21:11.440 --> 0:21:14.520 and also the awareness that there's more to come is 0:21:14.560 --> 0:21:18.280 going to put employers off taking people on even more. 0:21:18.880 --> 0:21:21.760 So I do think it's it's not the ideal time 0:21:21.800 --> 0:21:24.639 to be doing this, even if you agreed with the 0:21:24.760 --> 0:21:28.320 kind of underlying, you know, kind of principle, and I 0:21:28.320 --> 0:21:33.280 think a lot of it's arguably driven by ideology more 0:21:33.320 --> 0:21:38.159 than practicality. I mean, obviously labor is kind of funded 0:21:38.160 --> 0:21:41.360 by the trade unions to a great extent. Again, nothing 0:21:41.440 --> 0:21:43.439 necessarily wrong with that, but means they're going to operate 0:21:43.520 --> 0:21:46.800 in you know, in line with what they want. And 0:21:46.840 --> 0:21:49.560 the problem is that it's all very well, but it's 0:21:49.600 --> 0:21:52.280 great having worker protections if you've got a job, but 0:21:52.320 --> 0:21:54.080 if it makes it harder for you to get a job, 0:21:54.119 --> 0:21:56.800 it's not so great. Yeah, it's a similar thing with 0:21:56.960 --> 0:21:59.520 the actually the renter's rights. But you know, one of 0:21:59.560 --> 0:22:02.000 the problems that is that is if you're already a 0:22:02.119 --> 0:22:04.160 rent up your phine, it's going to make it hard 0:22:04.200 --> 0:22:08.159 dot actually get a flat because landlords are going to 0:22:08.200 --> 0:22:09.680 be more locked in and they're going to be much 0:22:09.680 --> 0:22:13.800 more care for about people. 0:22:13.960 --> 0:22:19.520 Yeah. I haven't even got into the from the first 0:22:19.520 --> 0:22:21.600 of May, not the sixth of April, but you are 0:22:21.720 --> 0:22:25.520 right to bring it up because the Renters Reform Act 0:22:25.680 --> 0:22:29.560 is all about limiting competition, for example, bidding wars for 0:22:30.000 --> 0:22:34.199 flats or apartments or homes. It also limits the amount 0:22:34.200 --> 0:22:37.000 that you can increase the rent buy if you are 0:22:37.040 --> 0:22:41.080 a landlord. So there are beneficial things for renters, which 0:22:41.119 --> 0:22:44.320 perhaps again would if politically the Labor Party wants to 0:22:44.359 --> 0:22:47.520 discuss that, then surely that might be a positive. But 0:22:47.680 --> 0:22:49.640 as you say, if you can't get an apartment, then 0:22:49.680 --> 0:22:52.720 it's a problem. There are lots of other tax changes. 0:22:52.800 --> 0:22:55.840 Some have had lots of attention, like the change to 0:22:55.960 --> 0:23:00.359 inheritance tax on family businesses and farms, like the changenges 0:23:00.440 --> 0:23:04.240 to dividend and capital gains taxes, which have had quite 0:23:04.280 --> 0:23:07.879 a bit of attention i'd say from investors because again 0:23:08.080 --> 0:23:11.919 they're rashting up the tax. Take the Chancellor you know, 0:23:12.160 --> 0:23:15.800