Range of grants and reliefs expanded
Rishi Sunak has warned the total cost of Britain’s coronavirus response will reach £407bn by the end of next year, as he announced tax hikes to help pay down the UK soaring debts.
The Chancellor unveiled an extra £65bn in spending in his Budget, including an extension of the furlough scheme to September and a number of other relief measures.
But warning there is a price to pay for the Government’s huge spending spree, he announced tax on the biggest corporations will rise to 25pc by the end of 2023, and announced a freeze to income tax thresholds – meaning many Britons will pay more from 2022 onwards.
Vauxhall owner demands taxpayer help to keep Ellesmere Port open
Vauxhall’s Ellesmere Port factory will close with the loss of thousands of jobs unless it gets support from British taxpayers, the boss of the car maker has warned.
My colleague Alan Tovey reports:
Saving Ellesmere Port would mean building electric cars there, Mr Tavares said. That would require an even bigger investment than retooling the plant for new petrol or diesel vehicles.
Mr Tavares said his hand had been forced by November's announcement that new cars with internal combustion engines would be banned from 2030. That scuppered had a decision to replace the Astra with another model at Ellesmere Port.
Update on US markets
Moving across the pond for an update on US stocks after a heavily UK-focused day...
Markets are seeming to lack direction, with the S&P 500 slightly down - as a selloff in big tech overshadowed a rally in energy producers and banks - and the Dow Jones slightly up on gains by Boeing and American Express.
Weak economic data is weighing on markets, as the number of employees at US businesses rose by less than expected.
There is also a renewed bout of volatility in treasuries. According to Bloomberg, bonds are now pricing in the highest five-year inflation expectations since 2008.
JPMorgan staff won't need vaccine to return to office
Jamie Dimon, the chief executive of JPMorgan, has said the investment bank will not force staff to get vaccinations if they want to return to the office.
In comments to Bloomberg, he said: “We want people to take it, I think it’s a far better thing.
“You certainly can’t make it mandatory until it’s fully accessible, so that question can’t even be answered before June. But I do think we may see some companies do it. I could see an airline doing it or a hotel company doing it.”
It comes as others insist on a 'no jab, no job' policy. The UK has so far given out the first dose to 21m people, with talks of vaccine passports gaining traction.
Housebuilders lift London's markets
Housebuilders topped the FTSE 100 today, lifting the benchmark higher after the Chancellor confirmed a stamp duty extension and new 5pc deposit guarantee scheme.
In top slot was Barratt Developments, which gained 7pc to 732.6p, following closely by Persimmon which added 6.8pc to £28.95. Not far behind - as the fourth largest riser - was Taylor Wimpey which rose 6pc to 175.85p. On the FTSE 250 Redrow boosted 5pc to 588p.
Among other lifters was BT Group, British Airways' owner IAG and Whitbread, the UK's largest hospitality firm.
Sunak presser comes to an end
In answer to questions from our very own Ben Riley-Smith regarding possibly speeding the roadmap up on the back of data, Mr Sunak said the roadmap was always intended to be "cautious but irreversible", and the current dates will remain set in place as they are.
The press conference has come to an end, but the Chancellor still has a long evening ahead. Next stop: addressing the 1922 committee of bankbench Conservative MPs at 6pm, as per Politico Playbook's itinerary (see 07:29 post).
Sunak on corporation tax
"Corporation tax might not be the most effective way to drive capital investment up," said Mr Sunak in the ongoing press conference, but "we think our super deduction will hopefully do a better job of that in the next few years".
The Chancellor pointed out that uptick in corporation tax doesn't come for another two years and that by that point the OBR expects the economy to have recovered, making it a "safe time" to increase the tax.
Read my colleague Michael O'Dwyer's earlier article on the tax hike: First corporation tax hike in almost 50 years to raise extra £17bn
Analysis: what the Budget missed when it comes to the housing market
My colleague Isabelle Fraser has taken a look at what was missing today when it comes to the housing market. Despite the "crowd pleasers" of a stamp duty extension and 95pc mortgage guarantees, she says "the Chancellor dodged some big questions too". She adds:
There was no mention of the Green Homes Grant, a measure to give out vouchers to homeowners so they can upgrade their homes with eco-friendly measures. Last month there were reports that this over-subscribed scheme was actually being ended prematurely.
There was also no mention of cladding, a crisis that threatens to overwhelm the housing market. One may argue what is the point of helping thousands onto the ladder when many former first-time buyers are stuck in unsaleable homes?
Housing Secretary Robert Jenrick previously promised a levy on developers and a tax on building high-rises, but none of these were mentioned in the Budget.
There was also no mention of the slow-moving car crash that is the rental sector. With an effective ban on evictions still in place due to the pandemic, thousands of renters are in arrears, and many landlords are suffering as a result. There was no mention of any help to renters or landlords, allowing the crisis to roll on.
Fresh Sunak comments
Sunak is currently speaking in the press conference (see link in 16:49 post to watch), largely repeating what has already been said. He has admitted people don't like taxes, but says they dislike dishonesty more.
He ends his speech with "Our recovery begins today". Questions from the public, and press are now up.
Sainsbury's to cut 500 jobs
Sainsbury’s is set to cut 500 office roles across varying sectors as part of a bid to save money to reinvest in its core food business as part of its ‘food first’ agenda.
The grocer is reducing office space in Manchester, Holborn in London and Avebury in Milton Keynes. It is also closing parts of an office in Coventry and in Origin, London. Staff based in these offices will be moved to other existing locations, which are also being changed into more collaborative, flexible workspaces.
Chief executive Simon Roberts said: “Our new plan puts food first and will create a simpler, nimbler and more efficient business. The money we save will enable us to invest in what customers really care about - lower prices, exciting new products and the most convenient ways for them to shop.
“I know change is difficult, but to do the best job we can for our customers, it is vital that we adapt. I understand this will be a very difficult time for affected colleagues and we will do everything we can to fully support them.”
Sunak on again in 10
Tune in to the Chancellor's press conference, due to start at 5pm, here:
Readers' reactions to the Budget
Have a read of how you, our readers, are reacting to the budget:
Strong criticism from the Shadow Chancellor
In what could be Labour's attack lines taking shape, Shadow Chancellor Anneliese Dodds has come out with some strong words against Sunak's delivery today. See her tweet below:
Along similar lines, the Guardian's Jessica Elgot has been combing through Sunak's speech and found there were only two mentions of the NHS throughout and no mentions of 'social care':
Watch: The winners and losers in Sunak's Budget speech
Want to get more up to speed on what the Budget means for you? Check out this analysis by my colleague Ben Wright on the winners and losers in Rishi Sunak's speech this afternoon:
ICYMI: If you're more partial to the written word, my colleague Harry Brennan has got it all down for you.
The IFS’s Paul Johnson has made a historic comparison that Rishi Sunak is not likely to welcomes:
IPPR: Sunak is gambling on speed of recovery
The IPPR, a left-wing think-tank, has offered a critical review on Rishi Sunak’s Budget – warning the Chancellor is gambling on a strong rebound in activity that might not come into being.
Full report: £5bn ‘restart grants’ to give hospitality and retail reopening boost
My colleague Hannah Uttley has more details on the £5bn ‘restart grant’ announced today. She writes:
The grants are intended to provide financial certainty to businesses to help plan for reopening over the coming months, the Chancellor said.
Industry chiefs called the new round of grants “a welcome boost”, but warned the Government must remove the current state aid cap to ensure all businesses can benefit.
Non-essential retail businesses, which will reopen from April 12, will receive one-off grants up to £6,000 per premises, with hospitality and leisure businesses, including personal care and gyms, getting grants of up to £18,000.
Hospitality and leisure companies will receive more generous sums as they are set to reopen later than retailers and with more restrictions in place.
Pubs and restaurants will be allowed to reopen outdoor space from as early as April 12, but along with hotels will be forced to wait until May 17 to serve customers indoors. The hospitality sector is expected to be able to trade freely without restrictions from June 21.
The £5bn of new grants comes on top of £20bn already provided to cash-strapped businesses since the pandemic first hit.
Watch: How the Budget impacts you
For more detail on what the Budget means for your wallet, check out this video by my colleague Jessica Beard:
Will the 2021 budget make you richer or poorer? Try our calculator
Through the wonders of modern technology, we’ve produced this interactive calculator that will work out whether the Chancellor’s announcements will leave you richer or poorer (presuming you identify as a person, and not as a corporation):
FTSE 250 set to close near one-year high
The FTSE 250 is outperforming its blue-chip sibling today, up about 0.9pc currently as investors bet the latest round of fiscal support will help Britain’s mid-caps.
The index – which is much more domestically-exposed than the FTSE 100 – is set to close a little short of a one-year high.
Property companies are performing well on both indices, with lenders and retailers also doing well.
Stamp duty holiday extension: analysis
My colleague Isabelle Fraser has taken a close look at the stamp duty holiday extension, which she says “goes much further than many in the industry anticipated”. She adds:
Many had been concerned that it wouldn't be tapered and there would be another cliff edge, just pushed until later in the year.
But the Treasury has obviously heeded the warnings. In his speech, the Chancellor said the tax cut will continue in its current form until 30 June, after which the nil rate will change from £500,000 to £250,000 until 30 September, before returning to £125,000 on Oct 21.
This is great news for buyers: according to Rightmove, the average stamp duty saving in England is currently £5,802. Based on the current sales that have been agreed in England, 80pc of buyers would pay no stamp duty due to the holiday. Rightmove estimated that an additional 300,000 property transactions in England could get through by the end of June, equal to £1.75 bn in tax savings.
Questions remain over who will benefit, such as landlords, who have taken the opportunity during the holiday to snap up more properties and move them into company structures. There is also a question of whether the devolved authorities will follow the Chancellor's lead.
You can read more on the decision here: Boost for home buyers as stamp duty holiday extended to September
Hospitality industry welcomes Budget
Kate Nicholls, head of trade body UKHospitality, offered a warm welcome to the Budget earlier:
As a reminder, Rishi Sunak offered the sector a range of support, including business rates relief, and extended VAT cut and a freeze on alcohol duty rises.
Christian Mole, head of hospitality and leisure at EY UK & Ireland, added:
Although we expect consumer demand to recover relatively quickly, it is important to note that outdoor services will only be profitable for a small portion of the sector. Even after the scheduled 17 May full reopening, social distancing measures are likely to continue to limit operating capacity in restaurants and pubs.
Across all hospitality, many operators also face significantly increased debts and deferred rental obligations, which will need to be managed going forward.
Hospitality businesses will need ongoing government support as long as these challenges remain in place so it is encouraging to see the sector-specific support being offered.
OBR press briefing begins
Office for Budget Responsibility chair Richard Hughes has begun his video press briefing on the the fiscal watchdog’s latest set of forecasts. It’s likely to largely repeat things already in the documents, but may have some other interesting comments. You can follow live here:
Budget 2021: Our columnists react
Sam Brodbeck. Jeremy Warner. Ross Clark. Alexandra Philips. Russell Lynch.
They are names that could send a shiver down the spine of any Chancellor, and they’ve gathered together to give their verdicts on Rishi Sunak’s second Budget.
Read their full their analyses here: Slick Rishi was in campaign mode: Telegraph columnists give their verdict on the Budget
Unemployment – interactive chart
Here’s an interactive version of the OBR’s chart on unemployment, with that 6,5pc peak at the end of the year:
Full report: Repaying Covid-19 debts will take ‘decades’
My colleague Russell Lynch has a full report on today’s OBR forecasts (and the Budget itself). He writes:
The scale of the pandemic challenge facing the UK was underlined as the Chancellor warned it would take “decades” to repay the biggest deficit since the Second World War.
The Office for Budget Responsibility’s latest forecasts showed a deficit of £355bn for 2020/21 - smaller than the £394bn forecast in November but still the largest in peacetime history and 17pc of GDP.
Rishi Sunak said: “The amount we've borrowed is only comparable with the amount we borrowed during the two world wars. It is going to be the work of many governments, over many decades, to pay it back.”
Where will the new freeports be?
Rishi Sunak only announced freeport locations for England, with discussions over sites elsewhere in the UK to be held with the devolved administrations. Here a map of which areas will be getting freeports:
What the Budget means for your money
The Telegraph Money team have been grinding through the details of the Budget, pulling out the key facts on what it means for your money.
You can read a full breakdown of their findings on tax, pensions, mortgages, savings and general finances here:
If you’re not a fan of the thematic approach, My colleague Harry Brennan has broken it down into a list of winners and losers:
First corporation tax rise in 47 years
An interesting fact plucked from today’s OBR report and shared by Reuters’ Peter Thal Larsen:
OBR forecasts: Quarterly GDP
Here’s how the OBR’s forecasts for quarterly GDP growth look:
Budget 2021: Business and experts reacts
Naturally, my inbox is stuffed full of reaction to today’s Budget announcements. Let’s take a look at what people have been saying:
Samuel Tombs from Pantheon Macroeconomics says the Budget was “more stimulative than expected” in the short terms, adding:
The Chancellor deferred announcing new fiscal rules until the autumn, creating uncertainty about whether additional tax rises will be needed in time. We expect him eventually to commit to ensuring that the debt-to-GDP ratio is falling by the end of this parliament, which would set a borrowing ceiling of about 3.5pc in 2024/25, above the OBR’s 2.9pc forecast.
Nonetheless, additional tax rises might still be needed, if as we expect, GDP undershoots the OBR’s medium-term forecasts, which still incorporate very little scarring from the recent recession.
Paul Dales from Capital Economics said a long wait for interest rates hikes gives the Chancellor some breathing room:
Debt is now twice as sensitive to any rises in interest rates than before the crisis. But if we are right in thinking the Bank of England won’t raise interest rates until 2026, then the Chancellor has time on his side to come up with more creative solutions to either reduce the sensitivity of debt to interest rates (i.e. issue more long-dated gilts) or tweak the Bank of England’s mandate (i.e. increase its tolerance to inflation) so that it keeps rates lower for longer.
Emmanuel Cau from Barclays said markets seem to expect Rishi Sunak’s step will succeed in boosting output:
Markets seem to be of the view that the budget will boost the UK economy, with domestic exposed stocks leading the upside and FTSE250 outperforming the more internationally geared FTSE100, gilts yields rising and GBP appreciating mildly.Aggressive fiscal stimulus is giving another boost to inflation expectations and thus even more pressure on the bond market, which hurts the most defensive parts of the equity market.
James Grzinic from Jefferies noted online retailers will have to wait for the autumn to learn their fate:
Absent today are details of how the UK business rates regime may be restructured. This will have to wait until November, by which time we will also learn how fiscal pressure on the online channel is ratcheted up. Ahead of those details it is tough to conclude specific impacts on stocks (as we debated earlier this year, click here).
Dean Turner from UBS Wealth management reckons sterling will extend gains on a cofnident economic footing:
The measures announced today will be unlikely to have a material impact on the economy in the short term. Instead, the easing of lockdown restrictions will be the more important factor in boosting GDP from 2Q onwards. The pound has consolidated its recent gains in the last few trading sessions; we continue to see the pound higher as the economic recovery builds.
The tone from business groups is broadly welcoming, although they want continued flexibility from the Chancellor.
Mike Cherry from the FSB says:
The challenge over the summer, and leading up to the autumn statement, will be to switch focus from survival to growth. We look forward to working with policymakers on that progression.
Adam Marshall from the BCC says:
While no business will relish paying higher rates of Corporation Tax in future, the impact of the Chancellor’s tough decision is blunted by the big new incentives for investment, lower rates for the smallest firms, and the extension of Coronavirus support measures in the short term.
This Budget provides reassurance to businesses, provided that they are able to restart and rebuild according to the Government’s road map. If firms face unexpected bumps in the road, the Chancellor must be prepared to take action until the economy is firing on all cylinders again.”
Frances O’Grady from the TUC slammed the Government over a failure to offer more support to public-sector workers:
We are in the worst recession of our lifetimes. But while President Biden acts big, the chancellor thinks small. We saw nothing like the investment we need to stop unemployment and level-up the UK with millions of new green jobs.
Freeports don’t create jobs – and around the world they allow freeloading employers to dodge taxes.
And after a year of key workers going above and beyond, it’s an insult that the chancellor announced no new support for our hard-pressed NHS or public services and no guarantee of a decent pay rise for all our public sector key workers.
Michelle Ovens from Small Business Britain welcomed the ‘Super Deduction’ programme:
As we look to get small businesses out of this emergency period, this support is absolutely critical. These measures will help small firms move through recovery and start to look at growth again. The ambitious ‘Super Deduction’ programme should also unlock unprecedented investment in growth for businesses.
Plans for NatWest sale pushed back again
An interesting note from the Budget Red Book – the Government has pushed back its target to complete the sale of NatWest, in which the taxpayer holds a majority stake.
It now expects the programme of sales to finish by the 2025–26 fiscal year, a year later than previously planned.
The divestment has been delayed multiple times – indeed, it was initially planned to be completed by March 2019.
The Government holds a 62pc stake in NatWest after bailing out the group, then Royal Bank of Scotland, during the financial crisis.
Government misses fiscal targets
Possibly not something many people will be up in arms about, but the OBR’s latest figures confirm that the Government has comprehensively (and understandable) whiffed its fiscal targets:
Net debt forecasts
The OBR’s net debt forecasts show total debt rising, before trending downwards again as the effect of tax rises kick in:
OBR forecasts: The master table
If you’d rather see all the key OBR forecasts in one spot, I have just the table for you:
Latest public sector borrowing forecasts
Here’s how the OBR’s latest forecast on public sector borrowing look, showing the biggest jump since the Second World War.
These reflect (per the OBR):
Stocks erase gains at bond yields rise
European stocks have erased their session gains in recent minutes as bonds fall again across the continent – causing yields to rise. It’s a worrying repeat of last week’s move, which was linked to fears of a resurgence in inflation.
Here’s how the FTSE 100 has shifted today:
Pound still flat
The pound barely shrugged at Mr Sunak’s speech, still broadly flat on the day:
Other parts of the market are showing more strain – more on that shortly…
New unemployment projections
Here’s how the OBR’s new set of predictions for the labour market look, with unemployment set to peak at 6.5pc at the end of the year:
Budget 2021: The key changes
Here are the key announcements from today’s Budget:
Furlough support extended until September
Corporation tax will rise to 25pc in 2023 but small firms benefit from lower rate
£5bn grant scheme announced for high street and hospitality firms
OBR predicts swifter recovery; GDP back at pre-Covid levels in mid-2022
£20 boost for weekly Universal Credit payments extended for six months
Stamp duty cut and business rates holiday extended
My colleague Tom Rees has rounded up all the details here:
Budget 2021 summary: key changes and highlights at a glance
Corporation tax and income threshold freezes are key policies to strengthen finances
A further look at the Government’s breakdown of the projected impacts of its policies shows that the corporation tax rise and the freeze on income tax thresholds are the crucial policies for strengtheing Britain’s finances in the coming years.
In the Commons, Keir Starmer accused the Chancellor of merely preparing for the next election; setting up longer-term rises that he will scrap ahead of the next election.
Net tax rises will kick in from 2023–24
The Red Book’s breakdown of the impact of today’s policy decisions shows that the net impact of tax rises won’t be felt until the 2023–24 fiscal year:
OBR publishes forecasts
The Office for Budget Responsibility’s full updated forecasts are out:
Here’s one of the key charts, of the fiscal watchdog’s predictions for growth:
IFS’s Johnson: Effective corporation tax may be higher
The Institute for Fiscal Studies’ director tweets:
Read the Budget in full
Starmer offers response
Labour leader Keir Starmer is now offering the Opposition’s response to the Budget, which he says “papers over the cracks, rather than rebuilding the foundation”. He added:
The Chancellor may think that this is time for a victory lap, but I’m afraid this Budget won’t feel good for the millions of people who are having their pay frozen, or the businesses swamped in debt.
Sunak finishes up
Mr Sunak has finished speaking. Journalists, MPs and businesses nationwide are now going to begin furtively digging through the Budget, so we’ll see what other gems emerge shortly. The OBR’s forecasts should arrive shortly.
Freeport locations announced
The Chancellor has announced locations for the first eight freeports in England:
East Midlands Airport
Felixstowe and Harwich
Liverpool City Region
£1bn for new Towns Deals
Mr Sunak have announced “over £1bn” for 45 new Towns Deals.
He adds that the Treasury has created a £150m fund to help communities “take ownership of pubs, theatres, shops, or local sports clubs at risk of loss”.
Funding for devolved administrations increased
In line with the Barnett formula, the Chancellor has outlined increased funding for the devolved administrations:
£1.2bn for the Scottish government; £740m for the Welsh government; And £410m for the Northern Ireland executive.
New visa for science, research and tech talent
The Chancellor says he is launching a consultation of a “new, unsponsored, points-based visa” to attract internationa talent in science, research and tech, as well as “radically simplified bureaucracy for high skilled visa applications”.
£1.6bn for vaccines
Another pre-announced measure: the Chancellor says he will pump another £1.6bn into the UK’s vaccine rollout programme.
More small measures
A couple more smaller announcements:
“Dozens” of UK business schools will begin to offer new executive development programmes
Small businesses will be offered a 50pc discount worth up to £5,000 apiece on productivity-enhancing software
Bank of England gets green tinge
The Chancellor says he is updating the monetary policy remit for the Bank of England, so that decision-makers at Threadneedle Street will have to “reflect the importance of environmental sustainability and the transition to net zero”.
UK Infrastructure Bank to be founded
The Chancellor announces the creation of the first ever UK Infrastructure Bank, which will be back in Leeds with an initial capitalisation of £12bn.
Mr Sunak says the body will support at least £40bn of total investment in infrastructure.
No increased duties on alcohol and fuel
The Chancellor (who looks like he’s near the home straight on mid-term support), says the Government will continue to freeze duties on alcohol, and also scrap a planned increase in fuel duty.
‘Biggest business tax cut in modern British history’
The Chancellor says the Super Deduction makes the UK’s tax regime for business investment “truly world-leading”. He adds:
Worth £25bn during the two-years it is in place this will be the biggest business tax cut in modern British history.
Companies offered tax relief if they invest
Another new policy: under what he has dubbed the ‘Super Deduction’, the Chancellor says for the next two years, companies that invest can reduce their tax bill be 130pc of the cost of the investment.
He gives an example
Under the existing rules, a construction firm buying £10m of new equipment could reduce their taxable income, in the year they invest, by £2.6m. With the Super Deduction, they can now reduce it by £13 million. We’ve never tried this before in our country.
Companies allowed to carry back some losses
In a policy likely to lead to hair being torn out by bean-counters nationwide, the Chancellor says he will allow companies to carry back losses for three years to boost their cash flow.
As he explains it:
This means companies can now claim additional tax refunds of up to £760,000. And because of the current 8% bank surcharge, the implied overall tax rate for banks would be too high. So we will review the surcharge, to make sure the combined rate of tax on the UK banking sector doesn’t increase significantly from its current level.
Yes sir, it’s a tax rise
The Chancellor knows that this announcement will cause some shockwaves. He adds:
So yes, it’s a tax rise on company profits. But only on the larger, most profitable companies. And only in two years’ time. And I wanted to announce this now because I think that, for business, certainty matters.
Corporation tax will rise to 25pc by 2023 – with exceptions
Huge announcement by the Chancellor, who says the Government will increase the rate of corporation tax in the UK to 25pc by 2023.
Even after this change the UK will still have the lowest corporation tax rate in the G7 – lower than the United States, Canada, Italy, Japan, Germany and France
The Chancellor adds several caveats, however:
Freeze will eliminate incremental benefits
The Chancellor continues:
But I want to be clear with all Members that this policy does remove the incremental benefit created had thresholds continued to increase with inflation. We are not hiding it, I am here, explaining it to the House and it is in the Budget document in black and white. It is a tax policy that is progressive and fair.
Personal tax thresholds to be frozen
Mr Sunak says the “first step” the Government is taking is to freeze personal tax thresholds after they rise next year. He says:
We will of course deliver our promise to increase it again next year to £12,570, but we will then keep it at this more generous level until April 2026. The Higher Rate threshold will similarly be increased next year, to £50,270, and will then also remain at that level for the same period. Nobody’s take home pay will be less than it is now, as a result of this policy.
No rises to income tax, national insurance or VAT
Laying out plans for supporting the economy in the coming years, the Chancellor says the Government will not raise income taxes, national insurance or VAT.
Warning over rising debts and costs
Crucial sentence from the Chancellor:
Just as it would be irresponsible to withdraw support too soon, it would also be irresponsible to allow our future borrowing and debt to rise unchecked.
When the next crisis comes, we need to be able to act again. And while our borrowing costs are affordable right now, interest rates and inflation may not stay low for ever; and just a 1ppt increase would cost us over £25bn. And as we have seen in the markets over the last few weeks, sovereign bond yields can rise sharply
Sunak: My actions will reduce borrowing
The Chancellor says steps he will set out today will reduce borrowing in the coming years (as per the OBR’s predictions):
Without corrective action, borrowing would continue at very high levels, leaving underlying debt rising indefinitely. Instead, because of the steps I am taking today, borrowing falls to 4.5% of GDP in 2022-23, 3.5% in 2023-24, then 2.9% and 2.8% in the following two years.And while underlying debt rises from 88.8% of GDP this year to 93.8% next year, it then peaks at 97.1% in 2023-24, before stabilising and falling slightly to 97% and 96.8% in the final two years of the forecast.
UK has borrowed £355bn this year
Mr Sunak says the UK has borrowed a record £355bn during this fiscal year, with a further £234bn set to be borrowed in the year from April.
Total support package has £407bn price tag
Getting down to the nasty numbers now. The Chancellor says that today’s Budget measures represent an additional £65bn of spending. He says:
Taking into account the significant support announced at Spending Review 20, this means our total Covid support package, this year and next, is £352bn. Once you include the measures announced at Spring Budget last year, including the step change in capital investment, total fiscal support from this Government over this year and next amounts to £407bn.
95pc mortgage guarantee
Another pre-announced policy: Mr Sunak launches a new mortgage guarantee policy, with major lenders set to begin offering 95pc mortgages (in which buyers put down just 5pc of the property’s cost as a deposit) from next month.
Stamp duty cut extended to end of June
Mr Sunak says that the stamp duty cut will remain in place until June, rather than wrapping up at the end of the month. He says:
So I can announce today the £500,000 nil rate band will not end on 31st of March, it will end on the 30th of June. Then, to smooth the transition back to normal, the nil rate band will be £250,000, double its standard level, until the end of September – and we will only return to the usual level of £125,000 from October 1st.
VAT cut extended to September
The Chancellor confirms that a 5pc reduced rate of VAT for companies in the hospitality and tourism sector will continue to the end of September.
There will then be an interim rate of 12.5pc for the six months after that.
Business rates holiday extended to end of June
The Chancellor confirms a business rates holiday for companies in the retail, hispitality and leisure sectors will continue to the end of June. For the rest of the year, they will receive a discount:
For the remaining nine months of the year, business rates will still be discounted by two thirds, up to a value of £2m for closed businesses, with a lower cap for those who have been able to stay open.
He says this is a £6bn tax cut for businesses.
Cash grants for businesses confirmed
A slew of updates for businesses now. Mr Sunak says the Government will launch a “Restart Grant” from April to provide support for businesses. He says:
Non-essential retail businesses will open first, so they’ll receive grants of up to £6,000 per premises. Hospitality and leisure businesses, including personal care and gyms, will open later, or be more impacted by restrictions when they do, so we’ll give them grants of up to £18,000. That’s £5bn of new grants; on top of the £20bn we’ve already provided; taking our total direct cash support to business to £25bn.
He also announces a “recovery Loan Scheme” to replace Bounce-Back Loans and the CBIL schemes as the wind down:
Businesses of any size can apply for loans from £25,000 up to £10m, through to the end of this year. And the government will provide a guarantee to lenders of 80%.
A quick flurry of smaller (but important spending measures):
An extra £19m for domestic violence programmes
£10m to support veterans with mental health issues
£40m to support survivors of the Thalidomide scandal
Apprenticeship incentive boosted
As part of his “plan for jobs”, the Chancellor says he is doubling the incentive payments businesses receive for taking on apprentices to £3,000.
Universal Credit uplift extended
The Chancellor says the £20 a week increase to Universal Credit will be extended by another six month, to provide further support for the poorest families (another policy that was announced in advance).
More people eligible for support
The Chancellor announces an extension of the group of self-employed people eligible for support:
When the scheme was launched, the newly self-employed couldn’t qualify because they hadn’t all filed a 2019-20 tax return. But as the tax return deadline has now passed, I can announce today that provided they filed a tax return by midnight last night over 600,000 more people, many of whom only became self-employed last year can now claim the fourth and fifth grants.
Self-employed support will be extended – but will vary
Mr Sunak confirms changes to support for the self-employed. Here are the specifics:
Support for the self-employed will also continue until September with a fourth grant covering the period February to April, and a fifth and final grant from May onwards. The fourth grant will provide three months of support at 80% of average trading profits. For the fifth grant, people will continue to receive grants worth three months of average profits, with the system open for claims from late July…Support for the self-employed will also continue until September with a fourth grant covering the period February to April, and a fifth and final grant from May onwards. The fourth grant will provide three months of support at 80% of average trading profits. For the fifth grant, people will continue to receive grants worth three months of average profits, with the system open for claims from late July.
Furlough extension confirmed
The Chancellor has confirmed the extension of the furlough scheme, as was announced last night.
Unemployment peak will be lower than feared
On top of those improved growth figures, Rishi Sunak says the OBR has also lowered its projections for unemployment. He says:
In July last year, they expected unemployment to peak at 11.9%. Today, because of our interventions, they forecast a much lower peak: 6.5%. That means 1.8m fewer people are expected to be out of work than previously thought.
OBR forecasts in full
Here are the forecasts, as laid out by the Chancellor:
The OBR forecast that our economy will grow this year by 4%, by 7.3% in 2022, then 1.7%, 1.6% and 1.7% in the last three years of the forecast.
OBR expects economy to be at pre-Covid level by middle of 2022
Mr Sunak says the OBR has boosted its forecasts for GDP as a result of the UK’s vaccine success. He says:
First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis. Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that. And, third, in today’s Budget we begin the work of building our future economy.
Sunak: We must be ‘honest’ about cost of support
The Chancellor says the Government needs to be “honest” about the fiscal impact of the virus, saying:
First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis. Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that. And, third, in today’s Budget we begin the work of building our future economy.
Bleak economic backdrop
The Chancellor has laid out some of the grisly economic situation:
Since March, over 700,000 people have lost their jobs. Our economy has shrunk by 10pc – the largest fall in over 300 years. Our borrowing is the highest it has been outside of wartime. It’s going to take this country – and the whole world – a long time to recover from this extraordinary economic situation. But we will recover.
The Chancellor has opened his Budget speech. He harks back to his initial response a year ago, saying:
Much has changed. But one thing has stayed the same. I said I would do whatever it takes; I have done; and I will do so.
Budget: Watch live
PMQs is over, and the Budget will begin shortly.
You can watch live via the video embedded at the top of the blog, please refresh the page if you can’t see it.
After rising to within a whisker of $1.40 earlier today, the pound has flattened out with just a few minutes to go until Rishi Sunak speaks.
Labour’s Dodds: We need to rebuild economic foundations
Shadow chancellor Anneliese Dodds tweets:
If you’re just joining or re-joining us, here are some of our key reads ahead of the Budget which begins in under 10 minutes:
BACKGROUND: Five key numbers to watch for in the Budget
A little back-chat
Speaker Lindsay Hoyle seems disgruntled over the extent of pre-briefing:
Niesr: Targeted support will be needed for recovery
Research institute the National Institute of Economic and Social Research has laid out its thoughts on what the UK’s fiscal priorities should be in today’s Budget.
Its deputy director, Hande Kucuk, said:
As well as short-term measures to continue support to households and businesses through the pandemic, the Budget needs to provide a comprehensive fiscal framework to build confidence in sustained recovery given the significant uncertainty regarding the long-term effects of Covid-19 and Brexit.
Just as the size of the initial hit, the pace of the recovery will be highly uneven across households, businesses, sectors and regions, which require targeted and sustained support as well as regional planning to limit long-term economic and social damage. Withdrawing fiscal support too soon based on highly uncertain economic forecasts of swift economic recovery would put too much at stake.
Read more via the link below:
Over in the Commons, PMQs is kicking off…
Budget 2021: The key changes and highlights
Budget announcements come thick and fast, even when so many are briefed to the press ahead of time. My colleague Joe Curtis has rounded up what we already know, and will add in new policies as and when they are announced today:
Rabobank: Sunak’s influence on pound today could be limited
Rabobank foreign exchange strategist Jane Foley reckons the potential sterling shift during today’s announcement will be quite limited, suggesting that the level of pre-announcement this year means a lot has already been priced in. She writes:
Given the newsflow connected with the budget over the past few weeks, It would appear that the Chancellor may have little room to surprise the market. While this suggests room for a ‘sell on the fact’ reaction in GBP today, assuming that fiscal policy settings remain extremely accommodative, any such reaction is unlikely to extend too far in the near-term.
That said, the rally in GBP since the start of the year raises the question as to whether the market has been hasty in its assumptions over the outlook for UK growth.
A note on forecasts
Ahead of today’s OBR forecasts, Samuel Tombs from Pantheon Macroeconomics notes that the OBR’s forecasts on borrowing (naturally, quite a difficult task) haven’t quite matched reality so far:
More pre-Budget analysis
Here’s a smattering of the pre-budget analysis from around different parts of the media.
Our very own Russell Lynch says the key question is over how long favourable borrowing conditions can last, writing:
Politically, it suits Mr Sunak to begin making small down-payments on Covid borrowings through targeted measures such as corporation tax, even though he will almost certainly be spending tens of billions more than he gathers in this year: the extension of furlough until September, for example, and other support measures such as business rates relief, will see to that.
The move chimes with the focus grouping of the public mood about "paying the bills" for the pandemic.
Economically, however, it makes less sense. With the signalling of raising taxes, the Chancellor is pandering to the so-called “household fallacy” – governments do not have to behave like belt-tightening households, and it can be counter-productive if they do.
ITV’s Joel Hills reckons the Chancellor will introduce a windfall tax on companies that have done well during the crisis – pointing to foot retailers and online suppliers as an example.
The affected companies are unlikely to complain too publicly, not least because the tax would enjoy huge public support. It feels like a no-brainer.
I would caveat that by noting that the companies he is pointing to (e.g. Tesco), have already said that the surge in online orders have gone hand-in-hand with increased costs related to the pandemic.
Perhaps the most disheartening take of the day comes from The Times’s Daniel Finklenstein, who suggests that the Government should embrace the widely-criticised “household fallacy”:
One of the core principles of Conservative government since 2010 has been that this country has to pay its bills, in so far as it can. And while people don’t like paying bills, they understand this principle and agree with it. This was central to David Cameron’s re-election in 2015.
While people know that economics is complicated, they also see it quite simply. If you buy a load of stuff and you carry on buying it, you are going to have to settle up at some point.
That’s the logic that led the UK into the tough austerity conditions of much of the past decade, which Boris Johnson swept to power on a promise to end.
Sunak leaves for Commons
Following his photoshoot, Rishi Sunak has headed to the Commons. Before he presents the Budget at around 12:30pm, we’ll have Prime Minister’s Questions at noon.
Follow live political updates here: Rishi Sunak’s Budget will ‘restore control of public finances gradually’, says former Treasury minister
New Treasury economic campus will be in Darlington – BBC
BBC Newsnight’s Lewis Goodall says the Chancellor has announced plans to establish the Treasury’s new economic campus in Darlington:
The FT’s Alan Beattie points to a possible added motive:
As is tradition, photos are coming in of the Chancellor waving his red box ahead of the Budget in just under two hours’ time.
Less traditionally, he’s not getting much TV time, because most of the new channels are focus on Nicola Sturgeon’s appearance in front of MSPs over her handling of harassment claims against former SNP leader Alex Salmond.
Anyway, the pictures…
Treasury confirms contactless payment rise
In a statement, the Treasury has confirmed that Rishi Sunak will announce an increase in the UK’s legal limit on contactless payments to £100.
It said banks will implement the changes later this year.
The proportion of contactless payments rose to 60pc in September, up from 40pc at the outset of the pandemic.
More corporate news
Here are some more corporate headlines:
Greensill Capital to file for insolvency (FT): Greensill Capital, the once high-flying financial company that counts former prime minister David Cameron as an adviser, is preparing to file for insolvency in the UK.
Hipgnosis poaches executive: The music investment fund stoking a song rights buying frenzy has poached a senior executive from its biggest rival. Hipgnosis has recruited music publishing veteran Richard Rowe as executive vice president, just a month after he left competitor Round Hill Music.
Persimmon restores dividends: Housebuilder Persimmon has risen following full-year results. The FTSE 100 company vowed to restore its dividends, and said 2021 had got off to a strong start.
Deep in thought…
The Office for Budget Responsibility, Britain’s fiscal watchdog, has released this #BehindTheScenes look at its chair Richard Hughes, who appears to be deep in thought while contemplating its latest set of forecasts:
The OBR will release its latest set of forecasts straight after the Budget (at roughly 2pm), with Mr Hughes set to present the figures at 3pm:
Sunak to raise contactless limit to £100 – Standard
Rishi Sunak will increase the contactless payment limit to £100 in today’s Budget announcement, the Evening Standard reports
The limit was raised from £30 to £45 last spring.
The paper says:
Experts at the Treasury believe easier transactions will give an extra shot in the arm to the struggling London retail sector, worth over £31 billion, when it is allowed to open, helping to support jobs and businesses.
“London’s retail sector is famous across the world, with Oxford Street, Covent Garden and Westfield seen as global destinations for shopping,” Mr Sunak told the Evening Standard ahead of his statement to the Commons.
The rise is reportedly possible because of Britain’s exit from the EU, which sets a cap on contactless payments.
In January, the Financial Conduct Authority said it would begin a consultation on raising the cap to £100. It appears the Chancellor plans to short-circuit that process.
It’s worth noting that card issuers would have to approve the higher cap, with the FCA merely setting the boundaries.
Apropos of little more than the sheer joy of charts, here are a couple more interesting data snapshots as we work up towards the Chancellor’s speech.
Livings standards think tank the Resolution Foundation has taken yesterday’s furlough extension announcement – likely the flagship policy from today’s speech – as an opportunity to look back at the history of the Coronavirus Job Retention Scheme in its various guises over the past year:
Meanwhile, microeconomic think tank the Institute for Fiscal Studies has pointed out that an expected extension to the £20-a-week Universal Credit boost will still leave many out-of-work people with meagre benefit levels:
Budget preview: Twitter edition
For anyone just joining us, my colleague Matthew Caines has put together a handy Tweet thread rounding up the key points from today’s Budget – click through for more info:
Final PMI figures confirm continued services slowdown
Activity in the UK’s services sector continued to slow during February, underscoring the need for further support from today’s Budget.
IHS Markit’s final purchasing managers index reading for February came in at 49.5, slightly weaken than the 49.7 ‘flash’ estimate released last month. Any figure below 50 indicates a contraction in activity compared to the previous month.
The reading underscores the continued divergence between an expanding manufacturing sector and a weakening picture across the dominant services sector. The composite PMI gauge, which offers a weighted balance of the two major sectors, stood at 49.6 – weaker than the 49.8 flash.
Here are some key findings from IHS Markit’s latest set of surveys:
Vaccine roll out progress and confidence about the prospect of looser restrictions on trade resulted in a fourth consecutive monthly rise in business expectations
Staffing levels decreased at the slowest pace since Covid-19 first hit
Vaccine roll out progress and confidence about the prospect of looser restrictions on trade resulted in a fourth consecutive monthly rise in business expectations
New business volumes fell only slightly
Latest data indicated that new work from abroad continued to fall sharply
A lack of forward-bookings and reduced pressure on business capacity contributed to another decrease in backlogs of work across the service economy
Duncan Brock from the Chartered Institute of Procurement and Supply, which helps conduct the PMI surveys, said:
Vaccine programmes and the promised uplift in marketplace restrictions offered hope to ailing firms looking forward to a summer of roaring trade as optimism climbed to its highest since December 2006.
The rain on this parade comes in the form of the highest rise in input costs since February 2020 which is being passed on to consumers at a faster rate, as shipping, fuel and fresh food deliveries went up in price.
Added to this, the true employment picture is still hidden by extended furlough schemes making any surge in UK consumer spending limited if job insecurity ramps up and inflation rears its ugly head.
City watchdog welcomes Lord Hill’s listing review
The Financial Conduct Authority has welcomed Lord Hill’s listing review, saying it aims to publish a consultation paper on any potential changes by the summer.
The FCA supports high regulatory standards in the UK, alongside ensuring our capital markets are dynamic and effective for issuers and investors. Lord Hill’s report provides a valuable contribution in assessing how UK markets and regulation can continue to meet these objectives in future.
The FCA will carefully consider Lord Hill’s recommendations for changes to our listing rules, in line with our objectives, including on free float, dual class share structures, and special purpose acquisition companies (SPACs). Where appropriate, we will act quickly, with the aim of publishing a consultation paper by the summer. This would be open to all stakeholders’ views and responses. Subject to consultation feedback and FCA Board approval, we will seek to make relevant rules by late 2021.
We support the proposal for a fundamental review of the legislative framework for the prospectus regime, with a view to better aligning documentation requirements with the type of transaction being undertaken. The FCA looks forward to working closely with the Government and market participants to discuss and develop policy options that would best achieve this to an ambitious timetable.
Read today’s splash on it here: The City has to break free from EU rule, says Lord Hill
The four major tax levers Rishi Sunak could pull
Rishi Sunak has warned the country that taxes will need to rise to pay for the cost of the pandemic.
The Tories have promised not to raise income tax rates or National Insurance, but Mr Sunak has several other ways of generating more tax revenue. My colleagues Jessica Beard, Harry Brennan, Melissa Lawford and Will Kirkman outline what he could do:
Lever 1: income and capital gains tax
The £12,500 personal allowance for income tax was due to rise in the new tax year, but rumoured plans to freeze that threshold could raise an extra £6bn.
Meanwhile, upping CGT rates in line with income taxes would raise £14bn a year for the Treasury, the Office of Tax Simplification calculated.
Lever 2: pensions allowances
Wealthy pension savers are under threat in the Budget as the Chancellor is expected to freeze the threshold for the pensions “lifetime allowance”, which places a limit on how much savers can put into pension pots tax free. The stealth tax would freeze the limit at its current level – £1,073,100 – until 2024.
Anyone with more than the limit in their pension pot could be hit with punitive tax charges of up to 55pc. Over 290,000 workers already have pension wealth above the lifetime allowance but have not triggered the tax charge.
Lever 3: Stamp duty and council tax
Mr Sunak is reportedly planning a three-month extension of the stamp duty holiday in England and Northern Ireland.
This could take one of two forms. If the three-month extension is extended to all transactions, property website Rightmove estimates an additional 300,000 sales in England will benefit from tax savings totalling £1.75 billion.
But extending the tax break to all sales will not prevent a cliff edge in demand when the holiday ends, it will simply delay it until June.
Lever 4: VAT
The Treasury cut the value added tax customers paid for restaurants, hotels and attractions from 20pc to 5pc last year. In its current form, this cut will run until March 31.
However, while some firms like Pret, Nando's and Wetherspoon did cut prices, firms were not required to. Some firms have instead kept prices at pre-pandemic levels while using the tax cut to bolster profits. The firms that have already passed on the cut could potentially put prices back up if the tax cut is not extended beyond March.
The Government estimated that this could save households an average of £160 a year if the tax break is extended and firms pass the reduction onto consumers.
Key corporate stories
All eyes are on the Budget, but it’s also a pretty busy day for corporate reporting. Here are some of the day’s top stories:
Hiscox swings to loss after bruising Covid insurance fight: Hiscox swung to a $269m (£192m) pre-tax loss last year after the insurer was forced to pay out $475m for event cancellation and business interruption claims following a landmark court case.
Daily Mail owner buys New Scientist: Daily Mail and General Trust, owner of the Mail and i papers, has bought New Scientist Magazine for £70m as part of efforts to build its portfolio of subscription-generating titles.
DS Smith results steady: Paper and packaging company DS Smith reported steady full-year results, and offered above-consensus estimates for 2022 earnings, according to analysts.
Micro Focus jumps after Amazon tie-up: Shares in IT group Micro Focus have soared after it signed an agreement with Amazon to bring companies onto the US tech giant’s Web Services platform.
Pound makes early rise against dollar
The pound has started the day strongly, moving to within inches of $1.40 for the first time in a week, before pulling back slightly.
FTSE jumps at open
The FTSE 100 has jumped strongly at the open, with nearly all of London’s blue-chips making gains. It’s a fairly busy day for corporate reporting – I’ll bring you some more details on that front shortly.
The cost of borrowing
A lot of focus since the onset on the pandemic has been on the substantial debt pile that the UK has been building in its efforts to fight the pandemic.
The UK’s net debt as a percentage of GDP rose strongly last year, and is expected to remain elevated over the coming years – even in an ‘upside’ scenario, in which the economic bounces back quicker and more strongly than expected (something that vaccines may have enabled).
The figures have raised alarm in some quarters, particularly on the ever-vocal Conservative backbenchers, who have warned that Mr Sunak needs to either rein in spending or raise taxes to try and get rising debts under control.
More important that the raw debt number, however, are the costs of actually servicing the debt. Happily, on that front, debt interest rates are at an all-time low. Combined with the fact that the Bank of England is the biggest buyer of Government debt, borrowing conditions are hugely favourable:
Here’s some more detail on this topic from the BBC’s Andy Verity:
However, inflation is very much the topic du jour currently, especially after last week market mini-panic. As the FT’s economic editor Chris Giles points out with this graph, borrowing costs could rise “substantially” if there is a rise in inflation, or the BoE cranks up interest rates:
The trouble with THAT graph is that it ignores the potential benefits to the nation’s coffers from increasing interest rates and inflation: not least that they would probably arrive hand-in-hand with higher tax revenues.
It’s a argument that is going to last for some time, but certainly the most urgent calls for Mr Sunak to cut of spending look misplaced, especially given doing so could slow the UK’s economic rebound.
There are some good thoughts on that topic from the The Times’s David Smith in his column today:
Pound’s progress: Will Sunak’s speech re-ignite a sterling rally?
Despite the reduced scope for surprises, the pound’s movements during Mr Sunak’s speech will be closely watched as a live reflection of traders’ confidence in the Chancellor’s spending plans.
The pound has lost some momentum in recent days, dipping after a rally that took it to a three-year high of $1.42. Sterling weakened amid last week’s market wobbles, while were sparked by a rise in bond yields that prompted inflation fears.
Taking a longer view, the pound remains pretty close to its post-referendum high, and analysts predict it will be able to hit around $1.45 – roughly equal to pre-referendum levels – by the end of the year.
The macro backdrop: Five key numbers behind the Budget
With so much of Mr Sunak’s speech already out of the bag, there will be even greater focus on the OBR’s latest set of forecasts.
Our Economics Editor Russell Lynch has taken a look at where the UK’s key macroeconomic figures currently stand. He says there are five key number that will be on economists’ mind as they assess today’s figures. I’ve pulled together some key extracts, but you can read more here.
1) Structural deficit
The headline deficit figure will be scary - potentially about £360bn for 2020/21 - but the structural damage tells you more about the fiscal damage to be repaired through either spending cuts or tax rises.
2) Economic scarring
The long-term hit to the economy from Covid-19 was estimated at 3pc four months ago under the OBR’s base case. Although the forecaster did not assume a tough third lockdown in this scenario, the rapid roll-out of vaccines has exceeded its expectations so far in 2021.
The jobless rate was predicted to peak at 7.5pc between April and June under the watchdog’s November forecast, but vaccines and the extension of the furlough beyond April should bring that figure lower.
4) Debt interest ratio
The cost of servicing the borrowing needed to tackle the pandemic is under particular scrutiny after a rout in global bond markets this year amid concerns over the return of inflation.
The OBR’s inflation forecasts are worth keeping a close eye on because more than a quarter of the UK’s debt stock consists of index-linked gilts, which cost more as inflation rises.
Read more: Five key numbers to watch for in the Budget
Other key issues
Here’s the latest on other key topics:
Income tax: Mr Sunak is not expected to increase income tax rates, given the Tory 2019 manifesto pledge not to raise the rates of income tax, VAT or national insurance. However, as The Telegraph revealed, he is expected to freeze the £12,500 threshold, above which people start paying income tax, and the £50,000 threshold, above which people pay 40 per cent tax.
Capital gains tax: One idea being speculated on is that the thresholds for capital gains tax could be raised to something closer to those used for income tax. It is not known where the Chancellor has landed on the issue and, with fierce warnings from some Tories over such rises, he may choose to delay any move on that front.
Furlough: The Chancellor will extend the furlough scheme until September, well beyond the mid-June date for when the Government's reopening roadmap indicates lockdown will fully end.
Self-employment grants: Sizeable grants for the self-employed will continue, as The Telegraph revealed last month, with the fourth round of grants keeping the same terms as earlier versions.
Pensions: Mr Sunak reportedly has been considering freezing the lifetime allowance – the amount that people can save before incurring tax charges. If he takes that step, also dubbed a “stealth” tax rise, people could face a 25 per cent levy on any additional income from their pension pot.
‘Help to buy’ and stamp duty: The Chancellor will announce that fuel duty will not be rising, meaning a 5p per litre increase which had been due will not be taking place.
Universal Credit: The £20-a-month uplift in Universal Credit, a major benefits payment, will be extended by six months, helping poorer families through the financial impact of Covid.
High streets: A fund of £5bn will be announced to help pubs, restaurants, hairdressers and shops reopen after a deeply challenging past year with multiple lockdowns.
Cricket and the arts: The Chancellor will announce a £300 million package to help save summer sport, with cricket expected to be one of the big winners.
Investment: Around £22 billion for a new infrastructure bank will be announced, made up of an initial £12 billion on capital investment and £10 billion in loan guarantees.
Corporation tax: the great unknown
One of the unknowns going into today’s announcement regards corporation tax: the Chancellor is expected to hike rates at some point, but today might not be that day.
As my colleague Tim Wallace reports:
The Chancellor is expected to announce plans to raise the rate of corporation tax from 19 per cent, although the timings and end target for such a move remain unclear.
There has been widespread speculation that the rate could rise to 23 per cent or even 25 per cent, which would still be likely to be the lowest rate in the G7.
Treasury sources have pointed to the fact that Joe Biden's treasury secretary has indicated that she wants America's corporation tax to rise from 21 to 28 per cent.
The increase could start later in the year or early next year if Mr Sunak pushes to delay changes with the economy still in freeze from the Covid lockdown.
Read more: Spring Budget 2021: What time is the announcement, and what should we expect from the Chancellor's statement?
Here’s Mr Sunak’s itinerary for the day (per Politico’s Playbook):
Alongside the main event, we’ll also get a new set of forecasts from the Office for Budget Responsibility at around 2pm, which will offer up new projections on spending, growth, debt, employment and more.
What to expect today
It’s a big day for Rishi Sunak, but with fiscal statements from the Coca-Cola loving Chancellor already solidly in the double figures after just more than a year, perhaps not as momentous as your typical pre-pandemic Budget.
On top of that, a large amount of this year’s Budget – which will begin around 12:30pm – has been pre-announced, including that the hugely-popular furlough scheme will be extended to September, albeit with employers expected to begin contributing from the mid-summer.
As my colleague Ben-Riley Smith reported yesterday:
Unveiling his Budget on Wednesday, the Chancellor will pave the way for tens of billions in extra spending by extending furlough and the Universal Credit uplift until the end of September and confirming further sizeable grants for the self-employed.
The vast spring and summer spending suggests the Government believes that businesses will not be fully back to normal until the autumn…
He will reveal that the furlough scheme is to continue until the end of September – longer than expected – with millions of workers expected to benefit.
Self-employment grants of up to £2,500 a month until April will be announced – as The Telegraph revealed last month – with a scaled-back grant on offer after that. The Universal Credit uplift of £20 a week will be extended by six months and a string of summer spending plans to support pubs, sport and the high street will be announced.
With all that in mind, the Chancellor may be keeping some spending announcements up his sleeve – although he hasn’t managed to do so at every spending announcement over recent months, the Budget seems like a likely place for him to whip out some surprise sweeteners. Typically these involve funding for green projects or infrastructure.
Agenda: FTSE set to rise ahead of budget
Good morning. It's Budget Day. Rishi Sunak will address the House at 12 30pm this afternoon to present his second budget as chancellor.
Several major announcements have already been made, including plans to extend the furlough scheme until the autumn. Tax rises are also likely. The FTSE 100 is set to open in positive territory ahead of the speech.
Meanwhile Mr Sunak will also consider Lord Hill's 86-page report alongside the budget. In a bid to attract more high-growth companies to the City, the former EU commissioner has proposed a wide-ranging overhaul of regulations which would slash red tape and allow company founders to retain more power.
5 things to start your day
1) The City has to break free from EU rule, says Lord Hill: UK should use newfound freedom to turbocharge the City post-Brexit, said Jonathan Hill, former EU commissioner for financial services.
2) Greensill Capital seeks insolvency protection in Australia: Germany's financial regulator Bafin has meanwhile taken direct oversight of Greensill Bank, according to reports on Tuesday evening.
3) Singapore wealth fund backs North Sea carbon capture venture: Exclusive: Singapore’s sovereign wealth fund and other international investors have bought a slice of a leading UK carbon capture developer.
4) Biden's markets watchdog to put trading apps under new scrutiny: Gary Gensler, incoming Securities and Exchange Commission head, promised new scrutiny after the GameStop trading controversy.
5) Oil price rises put Opec under pressure: Opec officials are under pressure from members to lift production cuts that have sustained oil prices in recent months amid optimism.
What happened overnight
Stocks advanced in Asia on Wednesday after a wobbly day on Wall Street, when the S&P 500 gave back most of its gains from a day earlier.
In Hong Kong, the Hang Seng rose to 29,591.76. Tokyo's Nikkei 225 index added 0.2pc to 29,473.25, while the Kospi in Seoul picked up 0.6pc to 3,062.99. The Shanghai Composite index advanced 1.3pc to 3,555.28.
Australia's S&P/ASX 200 gained 0.8pc to 6,815.40 after the government reported the economy grew at a 3.1pc quarterly rate, but a minus 1.1pc annual rate, in the fourth quarter of last year. The better than expected result was helped by consumer demand and public spending, analysts said.
India's Sensex opened 0.8pc higher.
Coming up today
Corporate: Avast, Hiscox, Nichols, Persimmon, Polymetal International, Prudential, Vivo Energy (Full year results); Biffa, DS Smith (Trading statement)
Economics: Budget (UK), services PMI (UK, Japan, China, Germany, France, eurozone, Italy, Spain, US), GDP (Italy)