Kate Andrews Kate Andrews

Will Rishi Sunak’s Budget give Britain the boost it needs?

(Getty images)

For a man who has only delivered two Budgets, Rishi Sunak is no stranger to fiscal announcements. Last March’s £30bn spending splurge was just the start of hundreds of billions of pounds spent in the fight against Covid-19. Today Sunak pledged another £65bn: furlough and the Universal Credit uplift were both extended; incentive payments for businesses to take on apprentices were doubled; and ‘restart grants’ worth £5bn to help businesses get back on their feet were unveiled.

But this Budget wasn’t all giveaways. The Tory Chancellor announced a new, tiered system for corporation tax, which hikes the rate from 19 per cent to 25 per cent in 2023 for the most profitable businesses. He has also frozen personal income tax thresholds: dubbed a ‘stealth tax’, this will bump workers into higher tax brackets as wages rise while the thresholds don’t.

What does this mixed bag of policies mean for the UK’s economic recovery? The good news out of today’s Budget was an update from the Office for Budget Responsibility, which has moved forward its most recent forecast for GDP to return to pre-pandemic levels. This is now expected to happen in the middle of next year.

After contracting an astonishing 9.9 per cent in 2020, growth is forecast to be four per cent this year (reflecting a winter dominated by lockdown, and a summer in which restrictions are expected to be lifted), followed by a specular 7.3 per cent boom in 2022.

There are reasons to be hopeful about the UK’s growth prospects

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The more problematic news, however, is that after 2022, growth rates are expected to fall back down to business as usual: hovering around a fine, but by no means impressive, 1.6 per cent rate.  

As we continue to struggle through severe hits to the economy (another dip is predicted by the OBR this winter to account for the current lockdown), any positive growth figures might seem like good news.

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