The chancellor, Rishi Sunak, will deliver one of the most difficult budgets in recent times against the backdrop of the coronavirus outbreak.
The de facto emergency statement will outline the government’s response to the unfolding economic crisis, while Sunak is also expected to offer some indications about how he plans to deliver on Boris Johnson’s promises for higher spending made before the election.
Here are five key charts …
Economic growth
Economic growth in Britain was already slowing before the coronavirus outbreak threatened to trigger a global recession after Brexit uncertainty and the US-China trade war dragged down activity and business investment. Alongside the budget, the Office for Budget Responsibility will provide a fresh update for the country’s prospects. GDP growth is widely expected to be downgraded.
Public borrowing
Public borrowing is rising as the government ramps up spending on the NHS and as the economy slows, weighing on tax receipts. Sunak’s predecessor, Sajid Javid, had promised the biggest day-to-day spending rise for government departments in more than 15 years in 2020-21 in a bid to draw the line under austerity. Weaker growth and higher spending to cope with the coronavirus outbreak is expected to push public borrowing higher again. The extent of the rise in borrowing – and whether Sunak will stick within spending rules set by his predecessor – will be made clear at the budget.
Healthcare funding
Sunak promised over the weekend to give the NHS “whatever it needs” to tackle the coronavirus crisis. More details will be expected at the budget. After a decade of austerity, doctors believe the health service is not adequately prepared to deal with the outbreak. According to the Kings Fund, the UK has fewer acute hospital beds per 1,000 inhabitants than other advanced health systems. Over the past 30 years, the number of hospital beds in England has halved.
Vulnerable workers
One bright spot for Sunak is Britain’s labour market. Record numbers of people are in work, with the lowest unemployment rate since the mid 1970s. However, self-employment has risen sharply to more than 5 million, while the number of people on zero-hours contracts has hit almost a million. These people who would be most the vulnerable in an economic downturn triggered by the coronavirus. The TUC estimates almost 2 million of the lowest-paid workers don’t earn enough to qualify for statutory sick pay. Sunak could use the budget to do more to protect workers.
‘Levelling-up’
Though widely expected to take a backseat as the coronavirus response forms the centrepiece of Sunak’s first budget, the chancellor may unveil some spending measures designed to “level-up” Britain’s lopsided regional economy. According to the Institute for Fiscal Studies, increasing transport investment across the UK to the same levels as in London would cost an extra £19bn a year.
