THE BUDGET BACKGROUND
Less than eight months ago, Rishi Sunak presented a Budget that was anticipating the ending of
the pandemic’s impact on the UK economy. He announced extensions and end dates for the
furlough scheme, the self-employed income support scheme, reduced VAT for hospitality and the
£20 a week uplift to Universal Credit. To finance some of that expenditure, the Chancellor also
revealed a 6% increase in corporation tax, deferred until 2023.
That March 2021 Budget should have emerged in Autumn 2020, but, for a second successive year, political pragmatism
meant autumn was moved to spring. A few months ago it looked as if there would be a similar deferral for a third year,
but when the social care/NHS package was announced early in September, an Autumn Budget date was confirmed.
Some commentators felt that, with that package, the Chancellor had already presented at least a mini-Budget given the
£14bn a year increases in National Insurance Contributions (NICs) and dividend taxation that were introduced.
It is a moot point whether the UK is in the position today that the Chancellor was looking forward to in early March.
The pandemic has waned on one important measure – daily deaths have about halved over the last eight months –
but on another measure conditions have worsened – daily case rates are 550% higher than the level of early March. It
is a similar situation with the UK economy: