Sunak prepares to deliver budget for 'new economy'
UK chancellor Rishi Sunak will today (Wednesday 27 October) lay out his and the government's spending plans for the next three financial years, with a raft of policies — from tax to post-Brexit regulation — on the slate.
He has said the budget will start "the work of preparing for a new economy" post-COVID.
The Autumn Budget will be the second financial statement made by the chancellor this year. The event will be broadcast live on Parliament TV at 12.30pm GMT.
It comes amid a mixed economic backdrop in the UK, as the nation emerges from COVID-19 lockdowns. Businesses and consumers alike are currently grappling with a supply chain crisis due in part to a shortage of HGV drivers to move goods around the country.
There is also the threat of a cost of living crunch, as energy bills rise due to commodity prices soaring and the phasing out of some benefits handed out during COVID including the £20 ($27.50) Universal Credit uplift.
Read more: Budget 2021: What we know so far about Rishi Sunak's spending plan
Investors and banks are also waiting with bated breath to see if the Bank of England will raise interest rates at the next monetary policy meeting in November. Although GDP is just 0.8% below its February 2020 level, price inflation threatens and there is still the question of economic "scarring" from the pandemic.
Policies announced so far that will be laid out later on include £5.9bn for the NHS to tackle backlogs caused by the pandemic and an end to the public sector pay freeze.
The Treasury also said the chancellor will announce a £6.9bn boost for local transport. Of that, £5.7bn will go to sustainable transport settlements for city regions to boost productivity through train and station upgrades and the expansion of tram networks in cities outside of London.
There will also be a number of measures laid out in the government's 'plan for jobs' following the end of the furlough scheme.
READ OUR FULL BUDGET PREVIEW HERE
Rumours swirling this morning include a potential u-turn on the Universal Credit uplift, which the Conservative party has stood firm on for months, despite widespread calls for it to remain.
"We're hearing that there is going to be a change, particularly for those on universal credit in work. If he's going to do that, it is the right thing to do," Labour mayor of Greater Manchester Andy Burnham told Radio 4's Today Programme on Wednesday morning.
Other potential changes could include a reduction in student university fees, according to a report in The Guardian this morning which cited sources. The report said officials have tabled a potential cut from £9,250 to £8,500 per year, although the finer details of this may not make it into the budget due to time constraints. Student fee hikes were a legacy policy from the coalition government.
Sunak is benefitting from a strong economic rebound from the pandemic, but the pressure will be on on Wednesday to balance some Conservative calls for a tighter tax policy with spending to help the neediest as winter approaches.
Watch: What is a budget deficit and why does it matter?
