Britain’s chancellor of the Exchequer, Rishi Sunak, announced a wide range of measures on Wednesday to support the country’s emergence from the pandemic, including an extension of the government’s wage-support program, billions of pounds in business grants and aid for art institutions and sports clubs.
But Mr. Sunak also said corporate taxes would rise beginning in 2023 and he would freeze personal income tax allowances, a measure that will push more people into higher tax brackets.
A year into the job, Mr. Sunak is trying to use this budget to juggle a number of different goals. In the short term, he is aiming to support jobs as the vaccine rollout continues and the economy cautiously reopens. He announced extensions to emergency support programs that will last through the summer.
But he has been under pressure to signal how he will tackle the budget deficit. Borrowing this fiscal year has climbed to 355 billion (about $495 billion), a peacetime record, and a sixfold increase from the previous year. He has also faced questions about how he will meet the government’s commitment to “level up†the economy to reduce regional inequality and revitalize the post-Brexit economy.
“Coronavirus has caused one of the largest, most comprehensive and sustained economic shocks this country has ever faced,†Mr. Sunak said on Wednesday.
Last year, gross domestic product shrank nearly 10 percent, the worst in three centuries. The independent Office for Budget Responsibility forecast the British economy would grow 4 percent this year, less than predicted in November, but then increase 7.3 percent in 2022.
The economy will return to its pre-pandemic size in mid-2022, the watchdog forecast, six months earlier than previously predicted because of the vaccine rollout. The chancellor’s plans are “just about enough to balance the current budget and get debt falling,†Richard Hughes, chairman of Office for Budget Responsibility, said.
The measures announced on Wednesday include:
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5 billion pounds ($7 billion) in grants to nearly 700,000 businesses such as shops, restaurants, hairdressers, hotels and gyms;
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An extension to September of the furlough program that pays employees 80 percent of their wages for the hours they don’t work (businesses will have to contribute to the program starting in July);
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Additional grants for self-employed workers, and increased eligibility for 600,000 more people;
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£700 million for arts, culture and sports institutions;
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An increase starting in 2023 in the corporate tax rate for companies with profits greater than £50,000, from the current rate of 19 percent, and topping out at 25 percent for companies with profits in excess of £250,000;
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A “super deduction†on corporate taxes for business investment for two years, which will allow companies to reduce their tax bill by 130 percent of the amount spent on investment.
