Asda’s bold new boss may have spooked rivals, but shoppers will come out on top, writes Susannah Streeter in today’s Notebook
Asda sparks UK trolley war
While trade wars risk denting global growth, rivalries closer to home are disrupting the supermarket sector. Trolley wars are threatening to break out, after Asda’s new chair Allan Leighton boasted that he had a war chest to spend on turning around the struggling grocer.
Amid expectations that fresh rounds of cost cutting will be unleashed, it sent a shiver through the share prices of rivals Tesco, Marks and Spencer and Sainsbury’s. Just over £4.1bn was wiped off the value of the listed grocers in just two days of trading, highlighting that shareholders are expecting a period of intense competition, which is likely to hit profits, especially as it coincides with upcoming payroll cost increases.
However, it’s still going to be a struggle for Asda to compete on price alone, given the loyal customer followings of its rivals. For shoppers though, it’ll be welcome relief. They had been bracing for further rises to be passed on by the grocers later this year due to their higher tax burdens, so a price war may lighten the load for struggling families, particularly those lower income households, where the weekly shop makes up a significantly greater proportion of their incomes.
Jumping into bed and ISA
The hunt for tax havens is on, with more investors taking advantage of breaks to shield their portfolios. The Autumn Budget hiked the capital gains tax rate on stocks and shares from 10 per cent to 18 per cent for basic rate taxpayers and 20 per cent to 24 per cent for higher and additional rate taxpayers. This came hot on the heels of the previous government slashing to allowances for both capital gains tax and dividend tax.
There’s been a 59 per cent surge this year in Hargreaves Lansdown clients jumping into share exchange – which is also known as Bed&ISA. This is a strategy enabling investors to sell shares, and bank gains just below the capital gains threshold, and then buy them back within the tax-free wrapper.
It is worthwhile to try and ensure that all your gains in any one tax year fall within the annual capital gains tax allowance – which is only £3,000 this tax year – so there’s no tax to pay on your profits. But if you have both growth and income assets outside your ISA, it usually makes sense to hold income-producing assets within an ISA. This is because the rate you pay on income tends to be higher than that on capital gains, and you can choose when to take gains, whereas you can’t choose when to take income.
Emergency savings reminder
Looming to disability benefits means it’s a worrying time for those who rely on state support, especially given that their financial resilience is already under pressure. The HL Savings & Resilience Barometer shows that a household headed by someone with a disability has an average of £37 left at the end of the month after covering their usual expenses – compared to £240 among those without a disability. It damages their short-term resilience, because only 43 per cent have enough emergency savings – compared to 70 per cent of those without a disability.
For those currently in good health, it’s a reminder to consider what would happen if you were unable to work for a long period. You may have benefits from your employer that would kick in but check what would be available and whether you need to consider stand-alone critical illness cover or income protection. When life throws a curveball, emergency savings are crucial. It’s one reason why it’s so important to have emergency savings in place to cover 3-6 months’ worth of essential spending while you’re working age.
Fancy being a speaker?
Building confidence is so crucial to give the kick start needed for success in so many parts of our lives. Speakers for Schools, an initiative set up by my former BBC colleague Robert Peston, does just that. It opens eyes to careers many state school pupils may otherwise have felt excluded from. The speeches, in person, help build awareness and positivity and make inaccessible industries open to all.
As a speaker I have loved chatting to pupils all over the West Country over the past decade and, as a comp girl I know how important work experience was to help build my confidence. This is why it was fantastic to be at the 15th anniversary celebrations at Tate Britain and hear how the organisation plans further expansion into offering thousands more placements. The organisation is rebranding as Futures for All to encapsulate its growing mission, and is very keen to hear from sponsors, speakers and companies willing to open their doors, hearts and minds to giving talent a chance.
Quote of the week
‘’We are building confidence, resilience and adaptability. These are not just ‘nice to have’ attributes; they are the qualities young people need to thrive in challenging times.”
Robert Peston, founder of Speakers for Schools
Toasting savvy grads
We always talk about the importance of starting on an investment journey at a young age. Junior ISAs are such a good option for relatives to start and children to become engaged in. But the university years can be a hiatus, with budgets stretched to cover fees and social lives. I certainly focused on spending my part-time earnings on cider and black at the Sacks of Potatoes in Birmingham, rather than sowing the seeds of an investment portfolio. So, it was super refreshing to witness a surge of interest in investing among recent female graduates during one of my webinars for our Financially Fearless campaign. Questions came thick and fast from the ‘girl grads’ of Edinburgh. They toasted our initiative in style, though with sparkling wine, rather than pints of scrumpy.
Susannah Streeter is head of money and markets at Hargreaves Lansdown