Chancellor Rishi Sunak has set out an extra £65bn in COVID support for employees and businesses – but announced a freeze on income tax thresholds and a rise in corporation tax to help pay back the UK’s rising debts.
In his budget speech, Mr Sunak set out a three-part plan to “protect jobs and livelihoods of the British people”.
But he warned that “corrective action” would be needed to tackle the UK’s rising debt, as he set out how the government was now committed to spending £407bn on coronavirus support.
Mr Sunak said the COVID crisis had caused “acute” damage to the UK economy and acknowledged it would take “this country – and the whole world – a long time to recover from this extraordinary economic situation”.
But he vowed: “We will recover”.
“I said I would do whatever it takes; I have done and I will do,” the chancellor said, as he reiterated his promise to support workers and businesses through the pandemic.
The chancellor said the government had borrowed a record £355bn this year, which he said was the “highest level of borrowing since World War Two”.
Mr Sunak confirmed an extension of the furlough scheme until the end of September, with business being asked to contribute 10% of their furloughed employees’ wages in August and 20% in September.
The chancellor also set out the details of more support for the self-employed, including for those who missed out on initial government help.
And Mr Sunak announced the £20-a-week uplift in Universal Credit will continue for another six months.
In a package of support for businesses, the chancellor revealed:
- a continuation of the business rates holiday to the end of June, with a two-thirds discount for the remaining nine months of the financial year.
- an extension of a reduced rate of VAT for hospitality and tourism sectors until the end of September
Those buying houses will also enjoy an extension of the stamp duty holiday on purchases below £500,000 until the end of June, while Mr Sunak also confirmed a government guarantee on mortgages.
Setting out economic forecasts for the next few years, the chancellor said the Office for Budget Responsibility estimated the UK economy would grow by 4% this year and by 7.3% next year, before growing by 1.7%, 1.6% and 1.7% in the following three years.