Support activity in the face of the pandemic and prepare for the recovery: the British government will unveil its budgetary roadmap on Wednesday with billions of pounds in spending, but also initial savings measures.
Finance Minister Rishi Sunak will speak in the House of Commons, lower house of Parliament, a few days before the end of the reconfinement scheduled for December 2 in England and which will have lasted a month to stop the second wave of the pandemic again coronavirus.
It comes at a time when the race for vaccines feeds the hope of a return to normal in the world and in the United Kingdom in particular, the country being the most bereaved in Europe with more than 55,000 dead.
His speech is all the more expected given that the government had given up on presenting a budget in due form this fall.
The young minister (40), who enjoys great popularity in the Conservative ranks, will unveil a large spending plan for the 2021-2022 budget year, whether in health, school or security.
He is expected to give details of a gigantic investment plan of 100 billion pounds deployed over several years in infrastructure to modernize transport and respond to the climate crisis.
In the short term, the NHS health system will receive additional support of £ 3 billion to deal with the pandemic.
The government also announced that it would release 151 million pounds to help the homeless, the number of whom has grown due to the economic crisis.
This spending plan will also be an opportunity to change certain budgetary rules on investment which have long benefited London and the south-east of England, to the detriment of more disadvantaged regions that Prime Minister Boris Johnson has promised to help more.
First turns of the screw
Rishi Sunak warned over the weekend on Sky News that the UK was under “enormous pressure” and was facing a major “economic shock”. “The best thing to do is to support the economy, but we cannot continue to borrow at this level indefinitely,” he warned.
In parallel with its announcements on Wednesday, the public body OBR (Office for Budget Responsibility) will unveil its new economic forecasts on which the government relies.
The OBR will say what is the impact of the November reconfinement which promises to weigh down GDP in the fourth quarter after the summer rebound, and will give an idea of the recovery expected in 2021, knowing that it will also depend on negotiations in course on a post-Brexit trade agreement between London and Brussels.
And it should confirm an explosion in the public deficit which could approach 400 billion pounds for 2020-2021, while the debt now exceeds 2,000 billion pounds.
It must be said that the government had no other choice than to open the purse strings to cushion the shock of the health crisis.
So far, he has spent around 200 billion pounds, part of which for the partial unemployment scheme that Rishi Sunak has finally decided to extend for six months until March 2021.
However, this does not prevent layoffs from reaching an unprecedented level, due in particular to the difficulties in sectors such as air transport, trade or catering.
The government rejects any return to the austerity of the 2010s and any tax hikes for now. But the minister suggested a possible wage freeze in the civil service, outside the NHS, prompting an outcry from the Labor opposition and the unions.
Similarly, the government, which has just announced an additional investment of 24.1 billion pounds in defense, could reduce the budget for development aid to 0.5% of GDP, against 0.7% currently.
But these savings measures should only be a foretaste of a plan that will remain dominated by rising spending.
For Samuel Tombs, of Pantheon Economics, Mr. Sunak “will not say how to fill this hole (budgetary, note) until the budget of next year”, foreseeing tax increases in 2022, that is to say early enough before the elections legislative elections of 2024.