Spring Budget 2021: Our take on what really happened…

By Oliver Foster

Wednesday 03rd March

Last year, the Chancellor of the Exchequer delivered his first Budget after only four weeks in the job. At the time it was described as a baptism of fire for the newly appointed Rishi Sunak, who had to impress colleagues and the public alike with a package of fiscal measures that would deliver on the Government’s levelling up agenda – whilst acknowledging the very beginnings of what was to become the greatest public health emergency in generations.

Looking back, that first Budget was a mere drop in the ocean. Since then, he has committed billions and billions of pounds to support the efforts against coronavirus via a series of schemes that were unthinkable in March 2020.

So, the Chancellor would have been feeling the pressure today to get this right – which perhaps explains why pretty much all of it was tested and trailed in the lead-up to the big day. In recent weeks, questions have been asked as to how he was going to protect the people and businesses hit the hardest, while presenting a pathway for how we claw back the money spent combatting the virus.

Well, today Rishi set out to “level with the British people”. The Chancellor pledged to use the “full measure of our fiscal firepower” to protect livelihoods across the UK – the flagship announcement being the extension of the furlough scheme – while also issuing a stark warning that the Government must start thinking about repairing the economy.

This will mean tax rises, the Chancellor conceded, a thorny issue for a Conservative Party which had pledged in its manifesto not to raise income tax, national insurance or VAT.

Increasing corporation tax to 25% is not a breach of that pledge, but it has raised eyebrows amongst some Tory MPs, despite being delayed for several years. One of the few rabbits pulled out of the hat – and a particularly generous and surprising one – was the Super Deduction announcement, which Downing Street will be hoping is enough to buy off any of those otherwise sceptical backbenchers.

There were nods to the core pillars of this Government’s agenda of “levelling up” – including announcing Darlington as the home of the Treasury North campus and new freeports in Teeside and Liverpool. Ultimately, though, this was a war-time Budget with coronavirus at the heart of it.

Despite revised OBR forecasts suggesting an improved outlook thanks to the vaccination programme, there remains huge uncertainty about the economic future, with a number of significant variables in play. However, based on latest opinion polls alone, there is also growing evidence that the public understand the state of our finances, and if anything, will welcome the tough decisions that have been unveiled today. Moreover, Labour has been left totally stunned and will barely feature in the debate in the coming days – today was not a good day for Keir Starmer.

The Government has learnt the hard way on over-promising and under-delivering. Today, the Chancellor needed to do the opposite and set out a clear picture of what the next few years look like fiscally. In communications terms alone, he delivered.

Rishi can chalk this up as a win and treat himself to some of that Mexican Coke he’s addicted to!

Oliver Foster, Chief Executive

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