What's going on?

The UK announced plans this week to raise the country�s taxes, as its government tries to survive the morning after the pandemic-fueled night before.

What does this mean?

Governments around the world had to dig deep when the coronavirus outbreak brought their economies to a halt last year, and the UK�s was no exception. Now, though, those chickens have come home to roost, and the country has announced plans to raise taxes on its workers. The plan is yet to be approved, but if it is, it�ll add up to one of the biggest influxes of tax revenue as a percentage of the country�s economic output in its history. It�d still leave the UK with a lower tax rate than most other advanced economies, mind you�

Why should I care?

For markets: The UK tests the water.
It�s true that tax hikes will bring in some much-needed revenue, but they�re risky too. The move will leave Brits with less disposable income to spend when they�re out and about, which could slow down the all-important economic recovery. Other governments� eyes, then, will be on how it plays out for the country, especially in Europe � which has said it�ll keep pumping money into its own economy until 2022 � and in the US. Investors are particularly worried about how any tax hikes could affect the latter, and � spoilers � Morgan Stanley and Citibank aren�t optimistic: they just downgraded their outlook for the country�s stocks for the rest of the year (tweet this).

Zooming out: Diamonds aren�t forever.
Less disposable income means less money to spend on life�s little luxuries, which could spell trouble for De Beers. And the diamond mining and retail company was on such a roll too: it reported on Wednesday that it�s on track for its best year since 2016, as stuck-at-home shoppers with money to burn opted to spend it all on a bit of bling.