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Spring Budget 2021 – Preview

While policymakers in the US are wrangling about how much additional stimulus is required, the debate in the UK is more about what tax rises are needed to repair the damage to the public finances caused by the pandemic. Admittedly, in next week’s Budget the Chancellor, Rishi Sunak, appears intent on extending some of the temporary support for the economy for another few months. But the risk is that over the next two years he will be tempted to pull the rug out from under the feet of households and businesses by reducing the budget deficit at a faster pace than is currently scheduled. Not only would that undermine the economic recovery, but it could also cause more problems for the public finances than it solves.

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