Autumn Budget 2017: What financial service brands should know

In the UK this week, the Chancellor Philip Hammond presented the Autumn Budget to Parliament.

Below, our team of Senior Financial Service Analysts pinpoint the key changes that have been introduced and predict how consumers and brands will respond.

Stamp duty for first time buyers scrapped

“Perhaps the most eye-catching Budget announcement was the abolition of stamp duty for first-time buyers on the first £300,000 of home purchases under £500,000. This is the latest in a series of initiatives introduced in recent years to help would-be first-time buyers take their first step on the housing ladder, alongside Help to Buy home purchase schemes and the Help to Buy ISA.

This latest move will be welcomed by consumers struggling to save up a deposit to buy their first home, as it alleviates what can be a significant additional cost. Mintel’s latest research into consumer attitudes towards property ownership found that three in five of consumers believe that it has become too difficult to get on the housing ladder, while 56% say house prices are too high. Clearly, any moves to bring the cost down will be seen as a positive. However, it is important to note that this can only have a limited effect as it does nothing to bring down the size of deposits required. In fact, there is the potential for house prices to rise further as a result, as potential stamp duty savings are incorporated into higher asking prices.”

Rich Shepherd, Senior Financial Services Analyst at Mintel

Tax on diesel cars to be increased

“The Chancellor has announced a one-off tax increase on all new diesel cars that fall short of the latest emissions standards from April 2018. The tax will be levied on the first year of ownership with a different rate charged depending on the car’s CO2 emissions band, aimed at disincentivising people from buying diesel cars considered to be too pollutive.

Mintel research, conducted before the tax was announced, revealed that just over a third of people who intend to buy a car in the next three years would be interested in a diesel car, half the number that would be interested in a petrol equivalent. The Chancellor is hoping to encourage interest in electric alternatives by investing in charging infrastructure, as only one in 10 prospective car buyers say they would be interested in having an electric car at present.

The new diesel tax is likely to make prospective diesel car buyers think twice, particularly when considering vehicles with high CO2 emissions. This could have an impact on demand for diesel cars already in production, hitting manufacturers that are already working on cars that meet the new emissions standard.”

Patrick Ross, Senior Financial Services Analyst at Mintel

Competition in the banking sector to be additionally supported

“Ahead of the implementation of Open Banking in early 2018, the government has committed to support increased competition in the retail banking sector. This includes supporting for challenger banks, who are yet to break the dominance of the big six banking groups in the UK market.

The government also aims to raise awareness of Post Office banking services, which allow customers of the UK’s largest banks and building societies to make cash deposits, pay in cheques and withdraw money. Whilst this may help to offset the impact of further branch closures up and down the country, very few of the emerging challenger banks, that the government wants to help, are part of the Post Office’s initiative. Mintel’s research shows that a third of consumers are still heavily influenced by the availability of branches when selecting a new bank, suggesting online-only startups could stand a better chance of competing if they are able to join the Post Office’s Branch Banking service”.

Paul Davies, Senior Financial Services Analyst at Mintel

Rich Shepherd joined Mintel in 2013, and researches and writes a range of financial services reports. Prior to joining Mintel, Rich gained experience of lending and credit risk while working for HSBC. He has a BA (Hons) in Sociology.

Patrick Ross is Senior Financial Services Analyst at Mintel, writing reports and analyst insights for Mintel’s UK Financial Services team. Prior to joining Mintel in 2015, Patrick worked in both the payments and insurance industries, as well as working as an analyst for a market research company.

Paul Davies is a Senior Financial Services Analyst at Mintel, researching and writing UK financial services reports. Prior to joining Mintel, Paul held marketing roles within the Consumer Electronics sector for retailers such as Comet, as well as manufacturing companies including Binatone Telecom PLC. Paul has been a key speaker at Mintel’s Big Conversation events and has presented at McCann’s Digital 360 conference.