UK Chancellor of the Exchequer Rishi Sunak unveils his annual budget on Wednesday, promising measures to safeguard businesses and jobs while tackling virus-fuelled debt as England prepares to exit its third lockdown.
Ahead of the budget statement in parliament, Prime Minister Boris Johnson’s Conservative government announced late on Tuesday that it would extend its furlough scheme paying the bulk of wages for millions of private-sector workers.
News of the multi-billion-pound furlough extension until the end of September, five months longer than planned, boosted share prices of retailers and travel companies trading in London.
“We will continue doing whatever it takes to support the British people and businesses through this moment of crisis,” Sunak will say when delivering his budget to parliament from 1230 GMT, according to his department.
He will add that once the economy is “on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that”.
The furlough scheme has contributed to soaring government debt, which Sunak may tackle in part by using his budget to announce a rise in corporation tax or a levy on company profits, according to reports.
The furlough scheme has contributed to soaring government debt, which Sunak may tackle in part by using his budget to announce a rise in corporation tax or a levy on company profits, according to reports
At 19 per cent, Britain’s corporation tax rate is the nation’s lowest on record and one of the smallest in the Group of 20 bloc of wealthy nations.
The government has cut taxes during the pandemic – reducing sales tax on food, accommodation and attractions.
It has also lifted the threshold at which stamp duty is due on home purchases, helping property buyers and the construction sector.
Some or all of these measures could be extended in the budget, according to reports.
Cost of virus
Britain is the worst-hit country in Europe with more than 120,000 COVID deaths and four million cases. But its economic recovery hopes have been boosted by its rapid vaccination programme that has seen millions of adults receive a jab.
The economy shrunk almost 10 per cent in 2020 because of the impact of the pandemic, with activity also hampered by turmoil ahead of Britain’s eventual exit from the European Union.
Reflecting the problems, UK unemployment has shot up to a five-year high of 5.1 per cent.
England’s third lockdown will start to be lifted as from Monday, with the reopening of schools, followed by non-essential shops and hospitality in the coming months.
Since April 2020, or soon after the UK’s first virus lockdown, the government’s net borrowing has ballooned by £271 billion (€314bn), according to official data.
The state has pumped out around £280 billion in support packages over the past year to fight the virus fallout, according to the Treasury.
The budget is also expected to confirm the launch of an Infrastructure Bank with £12 billion in capital and £10bn in government guarantees.
The lender will be formed to finance private-sector projects in the green economy, focusing on areas such as carbon capture and renewable energy.