What would Mrs Thatcher think? Rishi Sunak’s first Budget

Economic commentary

This year will be a big one for fiscal statements. Last year’s Budget, originally scheduled for early December, was postponed because of the General Election. This means that there will be two Budgets in 2020, as well as a Comprehensive Spending Review (CSR), the results of which will be announced in July.

This week’s Budget should have provided the opportunity for the new Conservative administration to set out its economic and fiscal vision for the remainder of this Parliament. But preparations were disrupted in February by the sudden resignation of Sajid Javid, and it has subsequently become apparent that the Government must also respond to the outbreak of COVID-19 in the UK. Some of the big decisions that this Government will need to take, for example about a new fiscal framework about funding for social care, have been put off to another day. But after the short-term measures to mitigate the coronavirus had been dealt with, Rishi Sunak spent most of his hour-long statement setting out the broad parameters for the upcoming spending review and announcing some specific spending measures, especially those related to the Conservative Party’s election manifesto.

With the COVID-19 situation developing rapidly during the past few weeks, some of the measures announced in the Budget are not reflected in either the economic and fiscal forecasts made by the independent Office for Budget Responsibility (OBR) nor in the table of ‘policy measures’, along their costings, which accompany the Budget statement. The Budget’s arithmetic will therefore be subject to considerable revision when the next Budget is presented in the autumn.