Budget delay on cards as Rishi Sunak fails to name day

Speculation that the chancellor will delay his budget until next year is mounting after he instructed the spending watchdog to publish new forecasts without announcing an accompanying fiscal event. Read more: Budget delay on cards as Rishi Sunak fails to name day

Budget delay on cards as Rishi Sunak fails to name day

Speculation that the chancellor will delay his budget until next year is mounting after he instructed the spending watchdog to publish new forecasts without announcing an accompanying fiscal event.

In a letter to the Treasury select committee, Rishi Sunak said he had asked the Office for Budget Responsibility to prepare an economic and fiscal forecast to be presented to parliament on October 27.

The OBR’s document usually accompanies a budget or spending review but in a break from normal protocol, Sunak did not announce either. The OBR is legally required to publish two forecasts a year that can simply be released to parliament.

Andrew Goodwin, UK economist at Oxford Economics, said: “It is unusual for the date to be announced like this. Given the unusual choreography, it could well mean the budget will be delayed. Or perhaps the Treasury is deferring a decision until closer to the time.”

A three-year spending review is planned for the autumn, for which a new OBR forecast is required. Each Whitehall department has been instructed to find savings of 5 per cent but the formal launch of the process has been delayed until after the parliamentary recess.

Since changes made in 2017, annual budgets are meant to be in November or December to give business time to implement tax rules before the new financial year begins the following April. However, in 2019 the budget was delayed until the following March because of the December general election. In 2020, the autumn budget was pushed back to March 2021 because of the pandemic.

Sunak is considering delaying the budget until the spring once again, when the underlying state of the economy should be clearer, as The Guardian reported this month. The end of furlough in September, the withdrawal of tax breaks and volatile inflation are expected to make the autumn a particularly difficult time to produce reliable forecasts.

The budget is when tax changes are announced and Sunak will announce his fiscal rules. He has said he wants to put the public finances on a more sustainable footing, by paying for all day-to-day spending out of receipts and getting debt falling as a share of GDP.

The public finances have proved stronger than expected thanks to the pace of the recovery but higher interest rates have increased debt servicing costs since the OBR’s last outlook.

Goodwin said: “They [ministers] need to give the OBR sufficient notice, so they may have ensured they can go ahead if they decide they are ready. And if they decide they are not ready, they can still ensure the OBR fulfils its obligation to publish two forecasts per year.”

Treasury sources said that no decision on the budget date has been made.

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Budget delay on cards as Rishi Sunak fails to name day

Source : Business Matters More   

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UK workers on furlough falls below two million in the rush to reopen economy

The number of people on furlough fell below two million towards the end of June as the economic recovery gathered pace, official figures show. Read more: UK workers on furlough falls below two million in the rush to reopen economy

UK workers on furlough falls below two million in the rush to reopen economy

The number of people on furlough fell below two million towards the end of June as the economic recovery gathered pace, official figures show.

Almost three million people have come off furlough since the restrictions started to ease in March, according to HM Revenue & Customs. In May last year about nine million people were furloughed.

More up-to-date figures suggest that use of the scheme fell again in July. The Office for National Statistics said that between a million and 1.5 million people, or 5 per cent of the workforce, were furloughed this month. However, its findings, based on interviews with about 5,000 businesses, have consistently undershot government figures.

“It’s fantastic to see businesses across the UK open, employees returning to work and the numbers of furloughed jobs falling to their lowest levels since the scheme began,” Rishi Sunak, the chancellor, said: “I’m proud our Plan for Jobs is working and our support will continue in the months ahead.”

The number on furlough fell by 590,000 last month after dropping by 1.1 million in May. The reopening of the hospitality sector has helped young people to come off the scheme quickly, with the proportion of 18 to 24-year-olds on it declining from 10 per cent to 6 per cent.

Older people are now more likely to be furloughed than younger workers. One in ten workers aged 65 and over was on furlough last month, the highest of any age group.

The scheme is due to close at the end of September and employer contributions to furloughed staff’s wages are set to double to 20 per cent from August 1. Unemployment is expected to rise as a result, with the Bank of England expecting a 5.5 per cent peak this year.

Charlie McCurdy, an economist at the Resolution Foundation, the think tank, said that the number of people still on furlough was still “higher than many expected” and was a cause for concern.

Read more:
UK workers on furlough falls below two million in the rush to reopen economy

Source : Business Matters More   

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