The “Budget for a new age” was announced yesterday and amidst the ceremonial pictures of Rishi Sunak holding a tiny red briefcase (below is the best, trust me, I’ve looked), came the government's forecasts for the economy and its plans to tackle the worst of it.
Courtesy of the i.com
The state of the economy is promising, or at least, not as bad as previously thought. The inflation rate is a steady 3.1% (although this is expected to increase to 4% over the next year). Indeed, next year unemployment is expected to peak at 11.9% lower than previously expected. Overall, the Treasury forecasts the UK to return to pre-pandemic levels by 2022.
More specifically, eases on fuel duties and universal credit tapers come alongside living wage increases, in a reported bid to “help” low-paid citizens, which will be discussed later. Meanwhile, other specific policy decisions detail an extra £2.2 billion for the DoJ, £6 billion to help the DoH with NHS backlogs and £4.7 billion a year to help the DoE with schools. Overall, Whitehall will spend a planned £150 billion from 2019 to 2024.
More generally, this budget is seen as Sunak’s crusade against tax and putting money in peoples hands to “kickstart” the economy. The FT attributes this “moral mission” to good economic forecasts which have allowed the increase in government spending. Meanwhile, The Guardian has focused on Sunak’s call on universal credit laxation, and noted the government backbench’s silence during the outlining of planned increasing spending.The government’s announcement of a monumental spending plan is truly enough to make David Ricardo turn in his grave, yet this Keynesian methodology for post-pandemic reconstruction is highly sponsored by many economists.
Meanwhile, the IFS has quashed the science behind Sunak’s plan to help low-paid citizens and families. The economic think-tank predicted “real pain” for low-income families, and will "leave the average worker £13 thousand a year worse off”. Moreover, Sunak’s plans are far from fiscal flagrance. He has included a debt plan to reduce what debt as a proportion of GDP is by 2024-25, as The Economist reports that Mr. Sunak would like to avoid a legacy predominated by “the biggest borrowing spree in modern history”, hence we should be wary of thebudget next year, to see what the Treasury truly has in store for us.
Figures courtesy of The BBC
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