SPEND, SPEND, SPEND
Cash taps are turned on to end decade of austerity
MORE than a decade of austerity came to a spectacular halt yesterday, as Rishi Sunak unleashed the biggest budget give- away in almost 30 years.
The new Chancellor unveiled plans to spend more than £600billion on infrastructure and innovation to help power the economy over the next five years.
This includes £27billion on main roads and motorways, a £2.5billion pothole fund, and £5billion on high speed broadband.
With annual total public spending now set to top £1trillion for the first time on record in 2022, the Treasury is embarking on a £100billion borrowing binge and pushing taxes to the highest level in more than 50 years. According to latest estimates from the Office for Budget Responsibility, the Government is set to borrow £96.4billion more as a result of the raft of policies announced yesterday.
But this figure does not even include a £12billion stimulus package – including emergency funds for the NHS and small businesses – to counter the shock of the coronavirus outbreak. Tax receipts are also set to hit £1trillion for the first time in 2024, according to the OBR’s latest forecasts.
The historic scale of the measures announced by Mr Sunak stunned even the most seasoned commentators. OBR chairman Robert Chote said: ‘ This is the biggest sustained giveaway since Norman Lamont’s ill-fated pre- election budget in March 1992.’ Paul Johnson, director of the Institute of Fiscal Studies, said: ‘Investment spending is set to rise to [its] highest level in modern times. Only when we had widespread public ownership was public investment spending at the sort of level now planned by this Government.’
In an upbeat speech, Mr Sunak was defiant about the massive spending spree, which he said was vital both to securing Britain’s long-term prosperity and to protecting the economy from the temporary ‘shock’ of the coronavirus outbreak.
Announcing that public sector net investment had hit its highest level since 1955, he said: ‘What everyone needs to know is that we are doing everything we can to keep this country, and our people, healthy and financially secure.’
The OBR forecasts that to pay for the giveaways, national debt will hit £2trillion by the end of the Parliament as annual borrowing jumps from 2.1 per cent of gross domestic product (GDP) in 201920 to 2.4 per cent in 2020-21 and 2.8 per cent in 2021-22.
Despite speculation that he would ditch the spending framework set by predecessor Sajid Javid, Mr Sunak insisted that his Budget was delivered ‘not just within the fiscal rules of the manifesto but with room to spare’.
The dramatic departure from austerity will cheer many of the ‘Red Wall’ voters in Labour’s north
‘Vital to securing long-term prosperity’ Yes, he may be little, but he’s got a VERY big wallet...
ern heartlands who helped deliver Boris Johnson a resounding majority in December.
But it has dismayed some on the Right, who argue the Government is abandoning the core Tory principle of fiscal responsibility.
Matthew Lesh, from Right-wing think-tank the Adam Smith Institute, accused Mr Sunak of ‘spending like a drunken sailor’, and criticised the Government for not doing more to cut taxes.