UK READY TO ROAR BACK

Fastest growth for FIFTY years predicted as PM says ‘pessimists got it wrong’

The prospect of a ‘strong, jobsled recovery’ was hailed by Boris Johnson last night as it emerged Budget forecasts will predict the fastest economic growth for half a century.

The Prime Minister said the ‘pessimists’ would be proved wrong about Britain’s fortunes, with the economy expected to bounce back strongly as the lockdown is eased.

Chancellor Rishi Sunak is set to predict the strongest revival for 50 years in tomorrow’s Budget. The Office for Budget Responsibility (OBR), which provides independent forecasts to the Government, is said to have upgraded its estimates sharply in the light of the successful rollout of the Covid vaccine.

health Secretary Matt hancock yesterday confirmed for the first time that the vaccine programme is ‘breaking the link’ between virus cases and deaths – fuelling hopes that the lifting of lockdown will

‘Animal spirits in the economy’

prove permanent. The OBR is expected to say the black hole in Britain’s finances created by the pandemic is significantly lower than the £29billion it suggested in November – and far below the £43billion the Treasury once feared.

One source close to the Budget process told the Financial Times: ‘The successful rollout of the vaccine is a material change in the last few months.’

Treasury sources did point out that part of the reason faster growth was expected was because of the sharp contraction in the economy last year. But one source acknowledged that the Chancellor was upbeat, saying his statement tomorrow would be ‘serious but optimistic’.

The apparent improvement in economic fortunes led to renewed calls from Tory MPs for the Chancellor to hold off on tax rises.

Mr Johnson last night confirmed the Daily Mail’s report last week that fuel duty will not increase.

And former Treasury minister Mel Stride said Mr Sunak should not even consider raising taxes until the autumn – and warned that earlier increases could choke off growth. Mr Stride, chairman of the cross-party Commons Treasury committee, said: ‘ The last thing we want the Chancellor to be doing now is jacking up taxes and dampening down the animal spirits in the economy.’

Mr Sunak is expected to raise corporation tax from 19 per cent to 20 and set out a ‘pathway’ to raising it to 23 per cent.

he will also announce a threeyear freeze on income tax thresholds, clawing back £6billion from workers and dragging 1.6million people into higher tax bands.

Speaking at the weekend, he vowed to ‘level with people’ about the ‘enormous shock’ caused to the economy by the pandemic.

Tory MPs are threatening mutiny over the prospect of any tax rises tomorrow, with Downing Street forced to warn last week that anyone who votes against the Budget will face expulsion from the parliamentary party.

But the Prime Minister struck an positive tone during a visit to Stoke-on-Trent yesterday.

he said the Chancellor was right to be ‘frank’ about the dire state of the public finances, admitting: ‘It’s been expensive to look after everybody throughout the pandemic.’

But he added: ‘I have no doubt that, if we get it right, as I’m sure we can, we can have a strong, jobsled recovery, that I think could be much stronger than many of the pessimists have been saying over the last six months or so.’

Yesterday, Mr Sunak also said the main focus of his Budget would be jobs. The £ 50billion furlough

scheme will be continued until the summer, alongside other Covid support.

He is expected to boost apprenticeships and is considering a national insurance holiday for firms that take on new staff. The Chancellor is also under pressure from northern Tories to support high streets.

Forty-five MPs from the Northern Research Group called for an extension of the business rates holiday to be followed by ‘fundamental reform’ after the pandemic.

IT sounds like the plot of some apocalyptic thriller. A mutant strain of a potentially deadly virus emerges deep in the heart of the Amazon basin. Then suddenly it springs up 5,000 miles away in england.

The identity and whereabouts of the person who carried it are unknown. A manhunt is launched, in the knowledge that with every human contact, he or she could be infecting others.

So far, so scary. But how afraid should we be of this ‘Brazilian variant’? Beyond the hyperbole, what do we actually know?

First, it’s one of many Covid mutations and similar in character to the South African and Kent variants, which have been in this country for some time.

There are fears that it may be less susceptible to vaccines, but there’s no substantial evidence. Studies have been small and inconclusive.

Crucially, it is not thought to be any more severe, or likely to lead to a rise in deaths. What’s more, researchers are confident that existing vaccines can be tweaked easily to contain any unforeseen problems.

So yes, we need to be vigilant over the Brazilian strain, but there’s no need to panic. And in the absence of some startling negative development, there’s certainly no cause to delay Boris Johnson’s roadmap for liberalising restrictions.

Indeed, the rest of the horizon could hardly be brighter, following a cascade of spectacularly optimistic announcements yesterday.

If the restrictions are lifted even in line with Mr Johnson’s cautious timetable, the Office for Budget Responsibility predicts we will bounce back with the fastest growth rate for 50 years. The deficit, too, is smaller than forecast.

As Bank of england chief economist Andy haldane told this newspaper recently, Britain is like ‘a coiled spring’ just waiting to be unleashed.

Then there is the continuing triumph of the vaccine rollout. A staggering 20 million people have now had at least one jab and by May we will be inoculating all over-40s.

The latest statistics show that even a single jab has cut death rates in the over70s by 85 per cent and hospitalisations by 80 per cent.

Separate research proves once again that teachers are at no greater risk of catching the virus than other workers, removing any excuse for schools not reopening in full.

In every direction the news is good and getting better by the day. The case for fully reopening our society and our economy is becoming overwhelming.

Chancellor Rishi Sunak’s challenge tomorrow is to harness this renewed confidence and deliver a genuine Budget for growth and recovery.

This means supporting businesses and helping them get back on their feet – not flooring them with a raft of new taxes.