In what will be one of the most anticipated budgets in generations, the British Chancellor of the Exchequer (Minister of Finance) Rishi Sunak will on Wednesday spell out the details of the government’s spending plans for the 2021 fiscal year.
Once again COVID-19 will be at the centre of the policies and projections.
Speculation has been running high across various sectors on what might be and what ought to be in the budget.
But whereas in 2020, the focus in both the Spring main budget and the autumn supplementary was on the response to the economic impact of the pandemic, from all indications this Wednesday’s presentation will be less of a ‘recovery budget’ and more of a stabilising act.
Speaking on Sunday, Mr Sunak was less inclined to reveal much of what was in the proverbial ‘red box’ (the briefcase used historically by Chancellor’s containing the details of the nation’s finances).
He however gave a few hints including confirming that government will allocate extra funds to support the UK’s successful COVID-19 national vaccine campaign.
Government support for furloughed workers will also be extended although the Chancellor has not stated for how much longer.
The salary-support scheme was introduced last year when many businesses were forced to close due to the outbreak.
Prime Minister Boris Johnson recently announcement of a phased and hoped-for ‘irreversible reopening plan, starting with schools next Monday conditional on the continued success of the vaccination roll-out.
Against that background, it is expected that Chancellor Sunak’s budget would create pathways for the economy to start rebuilding.
However, the huge borrowing that the government has had to undertake - over £270 billion(US$311 billion) for this financial year alone and its consequential impact on the national debt, will mean that repayment will be strongly factored into the 2021 budget.
The UK national debt has ballooned to be almost on par with GDP, which at £2.83 billion (US$ 3.9 billion) ranks the British economy at sixth globally, one step down from fifth.
The national debt is current pegged at £2.13 billion (US$2.9 billion).
The prospect of tax increases looms large especially for some segments of the corporate world with tech companies said to be in the Chancellor’s crosshairs particularly given the huge shift to online sales.
The British high street has been a main casualty of the pandemic with many businesses closing or moving their operations largely online, resulting in huge job losses in the retail sector.
Supporting the economy through a combination of public sector infrastructure projects alongside a balance of further easements and targeted tax increases are among the options said to be under consideration.