There will be a second Budget this year...you can bank on that

The ongoing challenges of the coronavirus mean the numbers just do not add up for Rishi Sunak, writes Brian Monteith

Such is the sudden domination of the broadcast news channels by the coronavirus pandemic that it is already hard to believe last week the new Chancellor of the Exchequer, Rishi Sunak, delivered with some panache the Conservative government’s first budget.

In ordinary times Sunak’s budget would have generated and indeed received a great deal of discussion and scrutiny. For if few were willing to believe Philip Hammond’s claim to have ended public spending “austerity” – that first started under the Conservative/liberal Democrat coalition way back in 2010 – then any claims of Tory austerity made now must ring absolutely hollow. Such is the Tories’ hosing of taxpayers’ money into the economy, especially on capital spending, there is practically a tsunami of funds approaching that will now bring its own problems, if not immediately then for future generations who will have to pay for the additional borrowing.

Some might say the generational theft of those alive now benefiting by taking from those who will as a result have to pay higher taxes in the future is only just, given that it is the younger generations who have been so keen to support such Corbynesque socialist economic policies. I cannot be so sanguine for I love my children and grandchildren and cannot accept they and the communities they shall in the future live in should be saddled by our generations’ financial indiscipline and greed.

Allowing the annual deficit to grow from £30 billion to £60bn is not prudent; but worse still it shall not stop there. Although allowance has been made for the economic impact of Covid19 I believe it has been underestimated and we can easily expect the deficit, and hence borrowing, to reach £100bn in pretty short order. Sunak will need an emergency budget before Christmas.

In time the UK’S debt will steadily mount, well north of the circa two trillion it is now, and when interest rates rise we shall face a calamity requiring austerity all over again of a more severe nature.

So you see, dear reader, there is logic and compassion to my belief we should continue to control our spending and seek to move from deficit and into surplus – so that we can begin to pay down the debt we have allowed to grow since this current millennium arrived.

The reason I fear the Chancellor’s figures are going to prove worthless is that after a business trip to London on Friday I have absolutely no doubt the predicted growth of 1.1 per cent for 2020 will prove to be wildly overestimated.

Instead I expect we are about to experience a very tough recession that will come about because of a Covid19 credit crunch, as cash flow difficulties cause many businesses to fail and unemployment to rise, feeding into further economic problems.

This must put a strain on tax revenues, which in such circumstances will fall – just as the requirement to fund greater demands on welfare benefits will be rising.

Evidence is of course only anecdotal at the moment, but it was difficult to ignore the restaurants in London’s West End were deserted for what was a Friday lunchtime and on that evening, when more go home for the weekend, Kings Cross was only about a third full of passengers I might normally witness underneath the departures board. The evidence being sent to me by