Brave policies to kick-start UK – we’ll soon know if they work

IT often takes several days for the costs and benefits of a budget to be weighed and measured and a realistic verdict on the impact it will have on the economy assessed. So, predictably, the initial euphoria following Rishi Sunak’s takeaway of delights to help Britain bounce back from coronavirus had calmed somewhat yesterday, as experts analysed the detail.

Some of the shine has definitely come off what looked, at first sight, to be a glittering set of measures. But the real proof of this pudding of a mini-budget – even more than financial statements that have gone before – will be in the eating.

We won’t know if Rishi’s mixture of the imaginative and the frankly madcap have worked, for months. And even then accurate judgements will be hard to make. It is clear that, for many sectors of the economy, things will be bad. But to what degree the Chancellor’s measures have lessened their impact will be rather more tricky to assess.

Although not mentioned by name, it is clear Mr Sunak had his eye on the tourist economies of the Westcountry when he unveiled some of his measures. And it will be the businesses that benefit from the cut in VAT on hospitality and accommodation, not the visitors – which is as it should be.

Customers get their reward too, of course, in the shape of a Monday to Wednesday tenner-off deal on eating out. If that helps fill up the sociallydistanced tables at at time of the week when traditionally things are quiet, then pubs, cafes and restaurants will start to claw back some of the losses they have incurred in lockdown. Other economic boosts, from the temporary suspension of stamp duty on house purchases up to £500,000, should have an impact that is easier to discern.

The housing market – including the market in second homes – has long been important to the South West economy. There is sometimes resentment at the £1m plus properties changing hands between holiday home owners in some of our swankier resorts.

But take a look at the builders’ and tradesmen’s vans parked on the driveways every time one is sold and you soon see the value of giving the housing market a fillip - even at the top end. Complaints that cutting stamp duty will inflate house prices look wide of the mark too. Overall the housing market is likely to be struggling if unemployment soars. It needs this tax-break.

The bigger and longer term picture from a budget which effectively hurls the book of rules on fiscal management through the window is how do we pay back all these handouts. Rishi won’t be able to keep giving things away. At sometime he – or his successors – will need to cover the nation’s debts.

That, as the Institute for Fiscal Studies warned yesterday, is likely to be a long job. But the measures taken by the Chancellor, from the very start of this crisis, were the right ones. We can – and will – argue over the details and whether pulling on this economic lever or pressing that financial button is really going to have the desired effect. Overall, however, the measures amount to an unprecedented, brave and targeted set of policies.