Budget ‘will add £100bn to borrowing after biggest giveaway since 1992’

CHANCELLOR Rishi Sunak’s spending spree marks the largest “Budget giveaway” since 1992 and will add around £100bn to public borrowing by 2024, according to Britain’s fiscal watchdog.

The Office for Budget Responsibility (OBR) forecast borrowing will soar to a six-year high of £66.7bn in 2021-22 to fund the Chancellor’s ambitious spending plans.

Mr Sunak unveiled £30bn of extra spending this year, including £12bn to tackle the impact of the coronavirus.

It comes just hours after the Bank of England slashed rates from 0.75% down to the historic low of 0.25% as part of emergency action to counter the economic shock of the outbreak.

The OBR estimates the Chancellor’s total Budget spending plans – worth £175bn over the next five years – will boost growth over the next two years by 0.5 percentage points.

But it will take its toll on the country’s borrowing level.

The OBR forecasts borrowing will jump from £47.4bn this financial year to £54.8bn in 2020-21 before surging to £66.7bn in 2021-22.

Together, the forecasts mean borrowing will total £290.6bn through to the end of 2023-24 – almost £100bn more than the £194.1bn previously forecast by the OBR.

Robert Chote, outgoing chairman of the OBR, said the spending splurge would leave the public finances “vulnerable”.

He said it “looks like the biggest sustained giveaway since Norman Lamont’s ill-fated budget in 1992” – a pointed reference to the spending announcements of that year that had to be reversed just months later when sterling crashed out of the European exchange rate mechanism.

The OBR also said it gives the Chancellor just a 60% chance of meeting his target to balance the current budget, which would be trimmed further after the coronavirus hit is taken into account. He will also miss the fiscal targets set by his predecessor, Philip Hammond, by £9.2bn, it added.

But Mr Sunak said he has until 2022-23 to meet his more recent current budget target, while the government has said it plans to review the fiscal framework ahead of the next Budget.

In its economic and fiscal outlook released alongside the Budget, the OBR said it was “impossible” to accurately predict the impact of the outbreak on the economy.