Rishi Sunak will today declare Britain is ready to enter a ‘new age of optimism’ and a ‘post-Covid’ economy as he is handed a Budget day growth boost.
Official forecasts, set to be updated today, are expected to show the economy is rebounding faster than predicted – allowing the Chancellor to splash more cash.
However, these predictions will have a sting in its tail as rising prices or worker shortages could cause financial pressure on households.
Mr Sunak will hail his Budget as ushering in a ‘new economy’ after the pandemic as he confirms billions of pounds for the NHS and wage rises for millions of workers.
He will emphasize fiscal responsibility and the need to control borrowing amid inflationary concerns and the threat of interest rates rising.
Rishi Sunak will announce that Britain is ready to enter a “new age of optimism” and a “post-Covid” economy in today’s Budget. Pictured: Nova, the pet dog of Mr Sunak
During his speech, Mr Sunak is expected to say: ‘Today’s Budget begins the work of preparing for a new economy post-Covid. An economy that pays higher wages, has higher skills, and is more productive, with strong public services, vibrant neighborhoods, and safer streets.
‘An economy fit for a new age of optimism. That is the stronger economy of the future.’
The Office for Budget Responsibility will give him positive forecasts, despite the looming threat from inflation.
The economy is in better shape now than it was at the March Budget. Lockdown restrictions have been relaxed and vaccines are being distributed.
Growth forecasts for this year will be revised from 4 per cent to as high as 7.5 per cent – giving Mr Sunak more leeway to pump money into public services as he sets out spending plans for Whitehall departments for three years.
Official forecasts are set to show the economy is rebounding faster than expected – a development that will allow the Chancellor (pictured last month) to splash more cash
He will also be able to take advantage of higher borrowing rates. It was:
÷ Ministers unveiled a new funding model to encourage more British investment in nuclear power stations – squeezing China out but risking higher home energy bills.
÷ Commons Speaker Sir Lindsay Hoyle complained Mr Sunak was treating MPs in a ‘discourteous manner’ by pre-briefing some of his Budget announcements.
÷ Union bosses demanded all public-sector workers should be given inflation-busting pay rises.
÷ It was warned that a new inflation forecast could reduce household incomes by £1,000 next year in real terms.
÷ The Budget is set to include a freeze on fuel duty – but not a cut on VAT on energy bills.
÷ MPs have been urged to wear masks during the Chancellor’s Budget speech by a World Health Organisation Covid expert.
In the Budget today, Mr Sunak will confirm a rise of the minimum wage to £9.50 from April and the end of the pay freeze he imposed on public-sector workers.
He will also unveil a further £5.9billion in capital funding to help the NHS clear the backlog created by Covid-19.
Mr Sunak will confirm a rise of minimum wage to £9.50 from April however, it was warned that a new inflation forecast could reduce household incomes by £1,000 next year. Pictured: A can of Sprite and a Twix next to Rishi’s red box, he said was his ‘pre-game routine’ for the Budget
Sir Lindsay Hoyle, Commons Speaker, (pictured) complained Mr Sunak was treating MPs in a ‘discourteous manner’ by pre-briefing some of his Budget announcements and said announcements should be to MPs first rather than the media
The Treasury has pledged green investment and policies to take advantage of post-Brexit freedoms and has touted nearly £7billion of new funding for local transport.
Mr Sunak will also establish new fiscal rules. These are expected to include a commitment not to borrow to finance day-to-day expenses within three years.
He will likely also need to reduce his government debt by around 100 percent of gross domestic product by 2025.
The Office for National Statistics data showed that government borrowing was lower than predicted in the first half the fiscal year. The budget deficit was £108.1billion between April and September, almost 30 per cent below predictions. However, Mr Sunak will warn that servicing the debt could be more expensive if prices rise.
In March, he pointed out that a 1 per cent rise in interest rates and inflation would cost us over £25billion, adding: ‘Over the medium term, we cannot allow debt to keep rising, and, given how high our debt now is, we need to pay close attention to affordability.’
Former Treasury minister David Gauke told Radio 4’s the World At One yesterday: ‘In the short term there is going to be some good news for the Chancellor as the economy has grown faster than projected.’ But he added: ‘There are still some real challenges.’
Shadow Chancellor Rachel Reeves urged Mr Sunak to ‘take the pressure off working people’.
She added: ‘Labour would ease the burden on households, cutting VAT on domestic energy bills immediately for six months, and we would not raise taxes on working people and British businesses while online giants get away without paying their fair share.’
There’s no time for flip-flopping. Chancellor
By Harriet Line Chief Political Correspondent
Relaxed: Rishi keeps his feet warm in socks and a trendy pair of £95 ‘sliders’ made by fashion label Palm Angels as he puts the finishing touches to his Budget
Today is likely to be anything but comfortable for Rishi Sunak, so the Chancellor was doing his best to relax yesterday – in a trendy pair of £95 ‘sliders’.
In glossy photos published by the Treasury, Mr Sunak was seen finishing up his Budget while wearing socks. He also wore the American-style shoes by Palm Angels. Popular with teenagers, sliders look similar to flipflops but have no central toe post.
Another photo showed a can of Sprite and a Twix next to his red box – after the teetotal Chancellor said he would eat the sugary snacks as his ‘pre-game routine’ for the Budget.
The third photo shows him reading on the couch with Nova, his red fox labrador dog Nova.