Britain’s chancellor of the exchequer Rishi Sunak has promised an extra £150 billion (€178 billion) in public spending after revised forecasts pointed to higher than expected economic growth and less damage to the economy from coronavirus. Introducing his autumn budget in the House of Commons, Mr Sunak said the improved forecasts reflected the strength of the British economy as it has emerged from the pandemic.
“Today’s budget does not draw a line under Covid. We have challenging months ahead. But today’s budget does begin the work of preparing for a new economy post-Covid,” he said.
The independent Office for Budget Responsibility (OBR) said it expected the British economy to grow by 6.5 per cent in 2021, up from its March forecast of 4 per cent. The economy will return to its pre-pandemic size by the end of this year and the OBR has revised downwards from 3 per cent to 2 per cent its estimate of the economic scarring left by coronavirus.
Mr Sunak said every government department would see its spending rise and he promised more than £2 billion in extra funding for courts, prisons and probation services. He resisted calls to keep in place a £20 per week uplift in the universal credit benefit paid to the poorest households, but cut the reduction in benefit paid to recipients who found work.
Northern Ireland
The budget will mean an extra £1.6 billion a year for public services in Northern Ireland and an average annual increase of 2.5 per cent in spending on infrastructure.
“This gives the Northern Ireland Executive sufficient funding certainty to plan in-year spending and to provide additional future investments in areas such as health, social care and education,” the UK treasury said.
Eleven projects in Northern Ireland will benefit from £50 million in extra funding from the government’s “levelling up” fund and a cut in air passenger duty on internal UK flights is expected to boost Northern airports. Northern Ireland will not benefit from Mr Sunak’s decision to cut duty on lower alcohol drinks, such as sparkling wine, because it remains subject to European Union excise rules.
Mr Sunak has presided over a bigger increase of taxes in 2021 than in any single year since 1993, but he told MPs his ambition is to cut taxes before the next general election.
“Taxes are rising to their highest level as a percentage of GDP since the 1950s. I don’t like it, but I cannot apologise for it – it’s the result of the unprecedented crisis we faced and the extraordinary action we took in response. But now we have a choice,” he said.
“Do we want to live in a country where the response to every question is: ‘what is the government going to do about it?’ Where every time prices rise, every time a company gets in trouble, every time some new challenge emerges, the answer is always: ‘the taxpayer must pay’? Or do we choose to recognise that government has limits. That government should have limits.”
