A little more than a year after coronavirus hit our shores…
COVID support understandably featured front and centre of Chancellor Rishi Sunak’s second Budget on 3 March, in what is an extraordinary and challenging time for the UK and global economies.
The Chancellor’s pledge to “continue doing whatever it takes” set the tone for proceedings, with the statement centring around a three-point plan offering support for jobs and businesses, and fixing finances, while setting a path for an economic rebound, which he anticipates will be “swifter and more sustained” than previously expected.
Outlined by the Chancellor, the Office for Budget Responsibility’s (OBR) medium-term economic outlook details a strong economic rebound for the UK, over the remainder of 2021, as restrictions ease, allowing economic activities to resume. Growth is expected to moderate towards the end of the year and output to return to its pre-pandemic level in mid-2022, six months earlier than previous predictions; this is predominantly reflective of the faster rollout of the vaccine. The OBR forecast the economy will grow by 4% this year and by 7.3% in 2022.
As the economy reopens and emergency fiscal support is withdrawn, borrowing is forecast to fall back from a peacetime record of £355bn in 2020/21 to £234bn in 2021/22.
During the Budget, the Chancellor chose not to set any new fiscal targets, though he did acknowledge that tax rises additional to the Corporation Tax rise he proposed for 2023 would be necessary in the coming years to help repair the public finances.
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