Chancellor Rishi Sunak has delivered a budget which he says will deliver stronger growth, public finances, and employment. Sunak stated that the budget does not draw a line under the pandemic, but does start the job of building a post-covid economy.

New fiscal rules were set out in the Chancellor’s speech. First, underlying public sector net debt should be falling as a percentage of GDP. And, second, in normal times the state should only borrow to invest. That means everyday spending must be paid through taxation, he says.

The Chancellor stated that the inflationary pressures impacting the economy are global in nature and cannot be addressed alone, but states that policies will be implemented to help struggling households. Office of Budget Responsibility forecast estimate the economy will grow by 6.5% this year, having forecast growth of only 4% in March. Unemployment is forecast to peak at 5.2%, down from a previous forecast of around 12%.

Borrowing in the 2021-2022 financial year will be 7.9% of GDP, falling to 3.3% in the financial year 2022-23, whilst departmental spending will grow by 3.8% per year in this parliament. The first round of funding from the Treasury’s Levelling Up Fund will see £1.7 billion distributed to towns and cities including Leeds and Doncaster.

Business rates are to be reformed to support businesses; this will include a 12-month relief for companies to invest in their premises. These incentives will be worth £750 million. The increase in the business rates multiplier that was planned for next year will be cancelled, a change worth £4.6 billion over the next five years. The Chancellor also announced a 50% business rates discount for companies in the leisure, retail, and hospitality sectors, up to a maximum of £110,000. The Government will increase spending on skills and training by £3.8 billion over the course of the parliament, a 42% increase. The £1 million Annual Investment Allowance will be extended to March 2023, following the increase in Corporation Tax to 25% in the March Budget. The Government will also continue to explore the arguments for and against a UK-wide Online Sales Tax and will publish a consultation shortly.

The Government is increasing support for the UK’s tech sector with over £160 million of investment from 2022-23 to 2024-25 into new and innovative industries and minimising the risk of digital harms to the UK’s economy, security and society. The settlement commits more than £50 million over the to ensure the UK continues to be a world leader in its approach to digital technologies. This includes a doubling of AI and data scholarships, funding an ambitious agenda on data policy, and digital identities. The settlement also includes over £110 million for the Government’s new online safety regime through the passage and implementation of the Online Safety Bill.

Regarding culture, the Chancellor announced that museums and cultural attractions will receive £850 million. The tax relief for museums and galleries, which was to end in March 2022, is to be extended for a further two years.

Leader of the Opposition Keir Starmer was unable to was unable to respond to the budget statement, having tested positive for Covid. Shadow Chancellor Rachel Reeves replied to the Chancellor in his place, stating that the Government was raising taxes on the wrong people. Reeves notes that the Chancellor had ‘found’ a tax deduction for international giants such as Amazon, whilst increasing national insurance.