The UK is ‘ready to roar back’: Predictions of fastest growth for FIFTY years and a black hole in nation’s finances that is MUCH smaller than feared £40bn – as Boris Johnson says ‘pessimists got it wrong’
- Rishi Sunak is set to predict the fastest economic growth for half a century
- The prospect of a ‘strong, jobs-led recovery’ was hailed by PM Boris Johnson
- Johnson said the ‘pessimists’ would be proved wrong about Britain’s fortunes
The prospect of a ‘strong, jobs-led recovery’ was hailed by Boris Johnson last night as it emerged Budget forecasts will predict the fastest economic growth for half a century.
The Prime Minister said the ‘pessimists’ would be proved wrong about Britain’s fortunes, with the economy expected to bounce back strongly as the lockdown is eased.
Chancellor Rishi Sunak is set to predict the strongest revival for 50 years in tomorrow’s Budget. The Office for Budget Responsibility (OBR), which provides independent forecasts to the Government, is said to have upgraded its estimates sharply in the light of the successful rollout of the Covid vaccine.
Chancellor Rishi Sunak is set to predict the strongest revival for 50 years in tomorrow’s Budget. Boris Johnson has hailed the prospect of a ‘strong, jobs-led recovery’. Pictured: Johnson and Sunak in the Chancellor’s promotional video
One source acknowledged that the Chancellor (pictured in his promotional video) was upbeat, saying his statement tomorrow would be ‘serious but optimistic’
Health Secretary Matt Hancock yesterday confirmed for the first time that the vaccine programme is ‘breaking the link’ between virus cases and deaths – fuelling hopes that the lifting of lockdown will prove permanent. The OBR is expected to say the black hole in Britain’s finances created by the pandemic is significantly lower than the £29billion it suggested in November – and far below the £43billion the Treasury once feared.
One source close to the Budget process told the Financial Times: ‘The successful rollout of the vaccine is a material change in the last few months.’
Treasury sources did point out that part of the reason faster growth was expected was because of the sharp contraction in the economy last year. But one source acknowledged that the Chancellor was upbeat, saying his statement tomorrow would be ‘serious but optimistic’.
The apparent improvement in economic fortunes led to renewed calls from Tory MPs for the Chancellor to hold off on tax rises.
The apparent improvement in economic fortunes led to renewed calls from Tory MPs for the Chancellor to hold off on tax rises
Mr Johnson last night confirmed the Daily Mail’s report last week that fuel duty will not increase.
And former Treasury minister Mel Stride said Mr Sunak should not even consider raising taxes until the autumn – and warned that earlier increases could choke off growth. Mr Stride, chairman of the cross-party Commons Treasury committee, said: ‘The last thing we want the Chancellor to be doing now is jacking up taxes and dampening down the animal spirits in the economy.’
Mr Sunak is expected to raise corporation tax from 19 per cent to 20 and set out a ‘pathway’ to raising it to 23 per cent.
He will also announce a three-year freeze on income tax thresholds, clawing back £6billion from workers and dragging 1.6million people into higher tax bands.
Speaking at the weekend, he vowed to ‘level with people’ about the ‘enormous shock’ caused to the economy by the pandemic.
The Prime Minister struck an positive tone during a visit to Stoke-on-Trent yesterday. He said the Chancellor was right to be ‘frank’ about the dire state of the public finances, admitting: ‘It’s been expensive to look after everybody throughout the pandemic.’ Pictured: Boris Johnson visited St Mary’s C.E. Primary School in Stoke-on-Trent on March 1
Tory MPs are threatening mutiny over the prospect of any tax rises tomorrow, with Downing Street forced to warn last week that anyone who votes against the Budget will face expulsion from the parliamentary party.
But the Prime Minister struck an positive tone during a visit to Stoke-on-Trent yesterday.
He said the Chancellor was right to be ‘frank’ about the dire state of the public finances, admitting: ‘It’s been expensive to look after everybody throughout the pandemic.’
But he added: ‘I have no doubt that, if we get it right, as I’m sure we can, we can have a strong, jobs-led recovery, that I think could be much stronger than many of the pessimists have been saying over the last six months or so.’
Yesterday, Mr Sunak also said the main focus of his Budget would be jobs. The £50billion furlough scheme will be continued until the summer, alongside other Covid support.
He is expected to boost apprenticeships and is considering a national insurance holiday for firms that take on new staff. The Chancellor is also under pressure from northern Tories to support high streets.
Forty-five MPs from the Northern Research Group called for an extension of the business rates holiday to be followed by ‘fundamental reform’ after the pandemic.