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Summary
- Experts feel Rishi Sunak may extend coronavirus support to people and businesses.
- The British finance minister is also likely to announce new investments to kickstart the economy, like setting up of a new infrastructure banks.
All eyes are on Rishi Sunak as tomorrow is a big day for him when he will lay out the budget giving the Boris Johnson government’s forecast for the economy and its revenue and expenditure plans.
It is but obvious that the pandemic would continue to take the centerstage, with focus on containing the burgeoning fiscal deficit at the same time. Jobs and ailing businesses would be getting continued support. Moreover, Sunak has also promised more funds for the national vaccination rollout.
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A £5-billion scheme to support the high street retail sector has already been rolled out and a mortgage guarantee scheme for the first-time buyers is likely to be in place.
Let us take a look at some of the crucial points that might be covered in tomorrow’s budget.
Employment support
Sunak is expected to extend the jobs support scheme, popularly called the furlough scheme, until 30 June. It pays for up to 80 per cent of employee salaries. The chancellor might also extend the Universal Credit by £20 per week for six months.
Additionally, media reports suggest that he could be announcing a major cash injection for a traineeship scheme to improve the employment prospects.
Stamp duty holiday
The stamp duty holiday introduced last year did manage to boost the housing market growth in an otherwise slowing down economy. It is likely that Sunak extends the tax break into summers as it is slated to end of 31 March.
Lower business rates
It is likely that the finance minister extends the ongoing business rate holiday into the summers which is set to expire by 31 March. For pubs and restaurants, a lower VAT (value added tax) rate scheme is likely to be continued.
Higher taxes
As Sunak has failed to keep the government borrowings under check, he might just announce several tax raises. One likelihood is of increasing the corporation tax rate from 19 per cent to 23 per cent, which could garner close to £12 billion for the exchequer.
He may also freeze the allowance for personal income tax which could generate a revenue of £6 billion for the government.
It goes without saying that Sunak has limited scope to collect a big chunk of revenue in the first go itself as realises that such a policy would choke the much-needed economic revival after the pandemic.
A new infrastructure bank
Sunak is likely to announce £12 billion of capital investment and £10 billion worth of government guarantees towards setting up of a new UK infrastructure bank. The bank would be launched in the coming spring months and is expected to support UK’s infrastructure investments.
Some of the funds will go into low-carbon projects, if media reports are to be believed. The government-backed green bonds for retail investors are also on cards.
