Britain s Treasury chief Rishi Sunak is set to paint a relatively rosy picture of the state of the British economy despite the devastating shock by the coronavirus pandemic when he presents his annual budget to Parliament later Wednesday.
With government borrowing less than anticipated a few months ago, following a fairly solid recovery from Britain’s deepest recession in around 300 years, Sunak has a bit of wiggle room on the taxes and spending front.
In remarks released ahead of his statement, the Chancellor of the Exchequer as he is formally known is set to tell lawmakers that the budget “begins the work of preparing for a new economy post-COVID” and delivering an “economy fit for a new age of optimism.”
Sunak emerged from his office at 11 Downing Street with his team, holding up the red budget box that contains the speech that he will give to Parliament. He has already briefed details of the speech to his Conservative Party colleagues in Prime Minister Boris Johnson s Cabinet.
Many of the speech's headlines have already been revealed, much to the fury of the Speaker of the House of Commons, Lindsay Hoyle
Sunak has already announced that spending on health will go up to sort out a massive virus-related backlog in care and that the minimum wage for low-income workers will go up by an inflation-busting 6.6% beginning in April. He has also said hat the public sector pay freeze for military personnel, police officers and teachers will end.
Given that inflation is set to rise further in the coming months, potentially to over 5%, there are concerns as to whether the pay increases will be enough to keep track with inflation. There is speculation that one of the highlights in the speech will be an increase in welfare support payments to lower-paid work, following criticism over Sunak's recent decision to scrap a pandemic-related uplift.
The main Labour Party opposition is urging Sunak to do more about the high cost of living, accusing him of “smoke and mirrors” in his pre-budget announcements.
Business executives have also expressed concerns about the planned increase in the minimum wage, given that they are already set to pay more taxes over the coming years at a time when they are still trying to recoup pandemic-generated losses and deal with current rising costs.
With many of the pandemic-related firefighting measures, such as a salary support scheme, now finished, Sunak is also expected to flesh out the funding arrangements of Johnson's long-term priorities of his boss, notably his ambition to “level up” the U.K. — that means spreading prosperity beyond the wealthy south that is the traditional Conservative heartland.