The Jersey Bankers Association says that difficult times lie ahead in the face of tougher tax measures locally and higher interest rates nationally.Last week the Bank of England announced a 0.25% rise in base rate to 3.75% – the first rise for four years.
Economists predict several more rises in the next 18 months, and these will push up people’s monthly mortgage payments.Last week’s Budget proposals from the Island’s Finance and Economics Committee will also hit taxpayers hard, with above-average rises for alcohol and tobacco, the freezing of personal allowances yet again, the abolition of mortgage interest tax relief except for the first £275,000 of a loan on a principal residence, and a 25% increase in vehicle registration duty.JBA president Gary Drinkwater said: ‘When interest rates rise, there is always concern because it affects so many people.
One quarter of one per cent is not going to break the bank, but it is a sign that people need to be prudent in their cash management, especially coming up to Christmas and New Year.’Mr Drinkwater, area manager for HSBC in Jersey, said that there was potential for interest rates to rise further, by another 0.25 per cent before Christmas and a further 0.5 per cent next year.He added that the tax increases in Jersey were also of concern, in particular the vehicle registration duty, the cap on mortgage interest relief and the taxation of benefits in kind.’People must start to budget now, as much as they can, and get a target budget for the next 12 months.
There is a need for prudence.’We are no longer living in the land where interest rates are going to keep coming down.
These things will affect people and are of significant concern.’
