THINK-TANKS ISSUE BUDGET WARNING
The new Chancellor has been warned he will either need to increase taxes or break the government’s borrowing rules when he delivers the country’s first post-Brexit Budget on Wednesday 11 March. Rishi Sunak was installed as Chancellor of the Exchequer following Sajid Javid’s shock resignation during the mid-February cabinet reshuffle. Mr Sunak is widely believed to be under intense pressure from the Prime Minister and his chief adviser, Dominic Cummings, to loosen the Treasury purse strings when he sets out the details of his first Budget. However, the new Chancellor has been urged by his predecessor to keep spending under control and retain the fiscal rules outlined in the Conservative election manifesto. In a personal statement to Parliament, Mr Javid argued against any watering down of commitments to fiscal discipline saying it would be wrong to pass the bill for current day-to-day spending to future generations.
CORONA VIRUS DENTS RECOVERY HOPES
Data released by ONS has confirmed the UK economy stalled in the final quarter of 2019 and the economic fallout from the corona virus outbreak looks set to hinder prospects of an imminent recovery. Gross domestic product (GDP) statistics published by ONS showed the UK economy saw zero growth across the final three months of 2019, down from a rise of 0.5% in the preceding quarter. This left last year’s annual GDP growth rate at 1.4%, marginally up from 2018, but still one of the weakest rates of expansion recorded since the 2008 financial crisis. The sluggish fourth quarter performance, though, was largely a result of the political turmoil gripping the country at that time. Survey evidence since the general election result was announced has pointed to a significant improvement in business sentiment and growth in consumer confidence.