The Budget’s corona contagion

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 resisting the clamour for action. But now that he is in Downing Street he has no intention of taking a similar risk.

With stock markets in turmoil, the feeling is that now is the time for a slimmed-down Budget. Rishi Sunak, the new Chancellor, has three big statements this year: this Budget, the spending review and the autumn Budget. It would be sensible to wait until later, when the uncertainty should have eased, to make big fiscal policy decisions.

The overwhelming focus of the Budget will be delivering manifesto promises: the extra 50,000 nurses, the 20,000 police, overhauling the much-abused ‘entrepreneurs’ relief’. 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.

Some analysts predict that the economic hit of coronavirus will be comparable to the 2008 financial crisis. But even if that’s the case, a fast rebound is expected — though, as Kate Andrews writes in her feature, it may well accelerate the move away from complex global supply chains.