Budget

Rishi Sunak’s planned corporation tax hike is a reminder of the importance he sets by trying to put the public finances on a sounder footing. He think that his room for manoeuvre in this crisis has been, in part, because the public finances were in reasonable shape before it.  The vaccination programme remains this government’s most important economic policy As I say in the magazine this week, his concern about debt has long been about the cost of servicing it (which remains low) rather than its precise level. But the debt pile is now so large that small movements in interest rates have big consequences. But straightening out the public

Labour is terrified of Rishi Sunak. Today’s Budget showed exactly why. The Chancellor put in an impressive performance: It was assured and hit the right notes at the right times. It also laid the groundwork for a narrative on the economy that will work very well for the Tories. Sunak told voters that George Osborne’s cuts created the money that comprised the Covid recovery spending. This ties together the whole of the last decade of Tory rule in a neat package – something Boris Johnson has avoided doing with his ‘I’ve only been Prime Minister for five minutes’ routine. Labour folk will now complain and shout ‘Tory austerity!’ until they are blue in the face.

When Rishi Sunak takes to the Despatch Box on Wednesday it will be against a backdrop of colossal national debt, the recent rise in government bond yields and the ongoing Coronavirus crisis. The British state owes £2.1 trillion, ten times the size of the entire economy of an independent Scotland. Yet some concerns over the health of the public finances are misguided – or at least exaggerated. The increase in borrowing to pay for Covid does not itself have to be repaid (at least in the short term). Why? Because provided the government can continue to make the interest payments, debt can simply be rolled over. What’s more, the UK

Rishi Sunak kept his Budget cards close to his chest this morning as he toured the studios for both BBC One’s The Andrew Marr show and Sky News’ Ridge on Sunday. The Chancellor batted away questions about spending and possible tax hikes, repeating over and over again that it’s only ‘appropriate’ to wait until the fiscal event this Wednesday to reveal the details of his plans. There were hints towards areas that have taken the Chancellor’s interest, including a passing comment about ‘business investment’ on Sky News – a bugbear of many on the right, who have long-argued that the UK’s corporate tax rate regime is ungenerous to businesses that

We already know much of what will be in Rishi Sunak’s Budget next week. Another £30bn for Covid-relief measures: furlough scheme into the summer, stamp duty holiday and the uplift in universal credit (which is also expected to be time-limited, despite pressure from the opposition to make a permanent adjustment). But this year’s spending splurges are becoming a footnote in a Budget dominated by the prospect of tax rises, for which the Chancellor is already receiving backlash from the left and right. Rumours of a corporation tax hike, circling for a week now, have not been denied. There’s also talk of capital gains tax coming under the Treasury’s spotlight, with

How will Rishi Sunak’s Budget land with Tory MPs? As reports circulate in the press that the Chancellor is considering raising corporation tax and capital gains tax as well as bringing in a stealth tax for pensioner savings, nerves are growing among Conservative politicians.  The Northern Research Group of MPs, chaired by Johnson’s old friend Jake Berry, have called on Sunak not to tax his way out of pandemic debt by raising business taxes in the budget. Tory MPs such as David Davis have warned they could refuse to vote for it if the reports are true. So who will Sunak listen to? Meanwhile, former prime minister David Cameron has popped up to

Last week, Katy Balls and I interviewed Rishi Sunak for the Christmas issue of The Spectator (out today) and his comments on debt have caused some interest in today’s newspapers. As ever with such interviews, there’s only so much you can squeeze into two pages but I thought it worth elaborating on his position today. I suspect it will come to define the political debate next year: yes, 2020 was a year of almighty splurge. Sunak has borrowed more in ten months than Gordon Brown did in ten years: but there was a pandemic. The question is how you get that back to normal. For a surprising number of Tories,

A huge increase in job centre advisers; special grants for companies taking on trainees; free cash for anyone insulating their home; cuts to National Insurance; reduction in VAT, and a £500 shopping voucher to re-boot a collapsing High Street. Oh, and an emergency GCRF, or Garden Centre Rescue Fund, to subsidise anyone who helps our heroic horticultural industry by building a new rockery or water feature. Okay, I’ll admit, I made that last one up. But all the others are suggestions that have been put forward for the Chancellor’s mini economic statement tomorrow. But perhaps Rishi Sunak should try something new: silence. In truth, the government has done an extraordinary

There are three dimensions to a UK budget: the political theatre, its underlying economics, and the measures themselves. My view is that the new Chancellor’s Budget speech was the most effective financial statement of any Chancellor since Nigel Lawson, for whom I worked as a Special Adviser. Rishi Sunak had a command of the economics, mastery over the detail to the measures and brought a political brio – not seen for 30 years or more – to the statement. The Budget offers an empirical, Conservative response to the circumstances of early 2020s. Understandably, however, some people are asking: what is Conservative about spending and borrowing hundreds of billions of pounds?

If Jeremy Corbyn had been saving his energy by giving a poor performance at PMQs, he wasn’t saving it for his Budget response. He sounded bored, almost as though he too is fed up of waiting for the Labour leadership contest to trundle to an end so that he can pack off and not have to respond to economic statements. Beside him, John McDonnell looked a little envious that the final big fiscal event of the duo’s time at the top of the party was the one Corbyn got to respond to, rather than the Shadow Chancellor. He even failed to notice that the debate was being chaired – as

We are likely to see a significant fiscal and monetary stimulus across the UK, eurozone and US in the coming days — lots more spending (e.g. tomorrow’s UK budget), and probably significant easing by the Bank of England, ECB and Fed (presumably measures to increase the flow of cheap credit to cash-strapped businesses and individuals, rather than pointless discount rate cuts). But all of that could be a temporary markets steroid unless the spread of virus is decelerated. So what really matters are stats on daily increases in infections, and whether what is happening in China and Korea — namely a sharp slowdown in new Covid-19 cases — is artificial

Rishi Sunak – We will give the NHS whatever it needs The Chancellor Rishi Sunak was the government’s representative across the TV studios today, ahead of his first Budget on Wednesday. Sunak remained tight lipped when asked about many of the specific measures he would be taking, but told Sky’s Sophy Ridge that the NHS could expect more cash to help with the strains caused by the coronavirus: SR: Are you ready to give more money to the NHS? RS: Absolutely. We stand ready to give the NHS whatever it needs. Flood defence spending will double Sunak also told Ridge that the amount of money the UK spent on flood

When Sajid Javid resigned in a row with No. 10, there was much speculation about what would be in the coming Budget. No one, though, predicted that it would end up being overshadowed by coronavirus. The short-term economic effects of this outbreak are almost unknowable. It is still hard to work out how serious it is going to be. One of those drawing up the government response plan tells me they would be happy if, in a year’s time, people thought they had wildly overreacted. Boris Johnson once said that the mayor in Jaws — who keeps the beaches open despite reports of a shark — was his hero for

The coronavirus is putting politics on hold. The Budget, as I say in this week’s magazine, will be a much less dramatic event because of it. Given the level of economic uncertainty the virus is creating, it would be sensible to wait for the autumn Budget — when the situation should be clearer — before making big, fiscal policy decisions. The Budget, as a consequence of this, will largely be about ‘delivering’ on the Tories’ manifesto commitments. In Downing Street they know that trust is a huge issue for both the government and Boris Johnson personally, so they want to show that they are keeping their promises. Given that the

UK and Scottish government modelling shows that the economic and fiscal costs of a Covid-19 epidemic could be on a par with the costs of the 2008 banking crisis. According to a senior government source: ‘that is what our modelling shows’. If millions were unable to work and significant numbers of businesses unable to trade – as usual during an epidemic – there would be a huge automatic rise in Universal Credit and other welfare payments to those quarantined. Further costs would be incurred from whatever schemes are put in place to shelter otherwise viable businesses from collapse, coupled with any emergency top ups to health and social care spending.

Could motorists be hit with the first fuel duty rise in ten years in this month’s Budget? According to the Sun, the PM’s chief advisor Dominic Cummings wants to use petrol and diesel as a revenue-raiser to fund big infrastructure projects outside the capital. But ending the fuel duty freeze after a decade might not be a good idea, particularly when many new Tory voters in the North are likely to be the worst affected. Fuel duty is an easy way to raise revenue in theory, as the demand for fuel is always high. It is also a tax that is difficult for motorists to avoid (though this doesn’t stop some from trying). Yet