Business and Finance

‘Whatever it takes’ – chancellor commits to strengthen economy

Chancellor Rishi Sunak preparing for Budget. Licensed from Wikimedia.

Rishi Sunak’s Budget 2021 statement in the Commons this afternoon has revealed a three-part plan to protect the jobs and livelihoods of the British people and level up the economy. 

In the first stage of the budget the chancellor said he would do whatever it takes to support the British people throughout the coronavirus crisis, shifting the focus to fixing public finances only once the UK is on it’s way to recovery, with the final stage of the budget being to build the UK’s future economy outside of the European Union. 

Based on the Office for Budget Responsibility forecasts, Mr Sunak said that the government’s COVID response is “working” and that the UK economy is forecasted to return to it’s pre-pandemic level next year but admits that “profound damage” has been done to the economy with the UK set to borrow a peacetime record of £355bn this year.

The chancellor announced that the furlough scheme, which sees employees receive 80% of their salary for hours not worked, will be extended until the end of September with businesses asked to first contribute 10% in July and 20% in August and September. 

It has also been announced that support for the self-employed will now be extended until the end of September and should now include 600,000 newly self-employed people who were not eligible for the scheme last year.

Five billion pounds has been promised in grants to ensure the re-opening of non-essential businesses, with up to £6,000 available per premises alongside a rise in incentive grants for apprenticeships.

With unemployment levels expected to peak at 6.5% next year, these grants are a move by Mr Sunak to encourage businesses to take on new hires.

Amongst the spending commitments announced to provide coronavirus support to the British Public was a Universal Credit uplift of £20 per-week for the next 6 months, a one-off payment of £500 for Tax Credit claimants and an increase in the minimum wage to £8.91 an hour from April. 

However, many charities have been vocal in saying that this is “insufficient for tackling rising poverty.”

The chancellor moved on to address domestic violence as “the hidden tragedy of lockdown” and announced an extra £19m in support of domestic violence programmes after it was revealed that 842,813 domestic abuse related offences were reported in the year ending September 2020, a 10% rise in domestic violence in the UK. 

Looking to the future, Mr Sunak has announced the government’s plans to “turn generation rent into generation buy” with 95% mortgages guaranteed by the government and supported by several of the country’s largest lenders. 

All personal income tax allowances and higher rate income tax thresholds are to be frozen, with corporation tax set to rise to 25% in April 2023,with an exemption for smaller businesses. 

Labour leader Kier Starmer has said that this budget “papers over the cracks” of a “shattered economy”.

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