It is difficult to imagine a more extraordinary set of circumstances for a Chancellor to deliver the Government’s Budget; only weeks into the job, facing a global public health and economic crisis of profound proportions.
This was a baptism of fire for Rishi Sunak to put it lightly, and in the space of two hours, he underlined why it is that the Conservative Party has been in power for more of the past 50 years than any other party: its leaders excel in reinvention in order to survive as a political force. Here are five things we learned.
1. Corona(virus) is king. Chancellor Rishi Sunak pledged billions of pounds in a package of fiscal stimulus to protect the UK economy – especially the self-employed, businesses and vulnerable people – during the looming public health crisis. Ahead of the Budget, the Bank of England announced an emergency cut in interest rates (from 0.75% to 0.25%) in a move designed to help the country battle a “large and sharp… but temporary” economic shock.
2. The Prime Minister backed up his manifesto pledge to ‘turbocharge’ public spending – on transport, infrastructure, housing and broadband, now undeniably a key pillar of the ‘Johnson-omics’ doctrine designed to reduce the wealth disparity between the North and South. While the fiscal rules remain in place, attempts to “balance the books” by the mid-2020s look set to be abandoned, ushering in a new era of public sector bricks and mortar spend eclipsing that delivered by the Labour government to tackle the financial crisis. A Budget to finally end the era of austerity?
3. Another Budget, another fuel duty freeze following a huge MP backlash. This will clearly go down well with a big constituency of motorists but public transport and climate campaigners won’t be happy. Sunak, a card-carrying free-marketeer and supporter of a low-tax economy, has also slashed taxes on women’s sanitary products alongside a duty freeze on spirits, wine and beer. Meanwhile, new but expected, levies on gas and plastics packaging were confirmed as the UK prepares for November’s COP26 climate conference in Glasgow.
4. Brexit has now left the Government lexicon – absent from the Budget announcement almost entirely – while the Prime Minister’s de facto No. 2, Michael Gove, has suggested that the EU wants to postpone the negotiations – scheduled to start in London on March 18th. Boris Johnson is still sticking firm to a June deadline for the two sides to make progress – threatening to walk away without it – yet they remain miles apart after a difficult opening four-day round of talks in Brussels last week
5. Sunak, who represents a Yorkshire constituency, has pledged to give more power to the regions. We’ve seen confirmation that £1.8bn from the Government coffers will be funnelled into a new combined West Yorkshire authority based in Leeds over the next three decades. With Treasury plans to move jobs north to drive economic growth also now set in stone, we can expect the Government’s ‘levelling up’ agenda of long-term, sustainable investment across the whole of England to start to come to life.