Overshadowed by the coronavirus, this budget will feel very unreal
Sky's Ed Conway says previous drafts for the budget have been thrown out and replaced by an alternative plan.
Wednesday 11 March 2020 13:55, UK
You're probably familiar with the typical budget day routine.
The chancellor stands outside Downing Street, parading the red box in front of the waiting photographers.
After a riotous session of Prime Minister's Questions, the big speech begins.
Bets are made over how long the chancellor will speak for and how many sips of water will be consumed.
How fast will they rush through all the bad news? Gordon Brown made a habit of reading out the deficit numbers so quickly no one could keep up.
What rabbits will be pulled from the hat?
The real analytical work begins when the chancellor sits down.
This is when the Treasury publishes the full details of the budget.
All eyes turn to the so-called "score card" showing how big (or indeed small) the exciting measures name-checked in his speech are.
We begin to learn whether this budget constitutes a big giveaway or whether the chancellor is giving with one hand and taking with the other.
The Office for Budget Responsibility (OBR) publish their full forecasts and we get to know the nitty gritty of how well the economy is doing.
There have been many budgets and fiscal events in recent years but they have all, for the most part, held to the pattern above.
Yet this year's budget - Rishi Sunak's first as chancellor - is likely to be very different indeed. For there will be an air of unreality hanging over the whole thing.
Until only a few weeks ago, the plan was supposed to be roughly as above.
What seems likely is that the UK will suffer a large cut to economic growth. It may face a recession.
Mr Sunak planned a budget which delivered the Tory manifesto and more besides. This was supposed to be the beginning of the Conservatives' "levelling up" agenda.
The OBR was planning to trim its growth forecasts for the next couple of years, along the lines of the Bank of England's latest projections (which is to say, down from 1.4% to just under 1% in this year).
The spreadsheets were nearly finished, the forecasts pretty much tied up.
But then along came the coronavirus.
And the upshot of COVID-19 is that this budget will feel very unreal indeed.
That unreality begins with the economic growth figures which, while they have been trimmed slightly, will be presented alongside provisos explaining that they are likely to overstate the eventual outcome.
The truth is that the virus outbreak, and the associated changes in behaviour - people cutting back on shopping and going out, people staying home from work - are so fast-moving that they are nearly impossible to model.
What seems likely is that the UK will suffer a large cut to economic growth. It may face a recession.
In the face of this economic crisis, the previous drafts for the budget have been thrown out and replaced by an alternative plan.
Much of the day will be devoted not to talking about the chancellor's long-term vision but about the short-term fixes he can put into place to help support the fight against the virus and support the wider economy.
The mood in the House of Commons is likely to be more sombre and reflective than usual.
This, after all, is a crisis which, unlike the financial crisis of 2008, cannot be easily laid at the door of one party or another.
It is what economists might call "exogenous" - a shock coming from outside that disrupts nearly every part of the economy.
And the other unreal thing about the budget is that everyone knows that whatever he says on Wednesday, the chances are the chancellor will have to announce further measures if the virus outbreak becomes more severe.
He may hold back from the more dramatic shock-and-awe policies but give himself the leeway to impose them if the economic backdrop worsens.
On the basis of economic cycle lengths in recent decades, Britain was overdue an economic slump or recession.
The only thing we didn't know was what would cause the slump.
Now we know the answer: COVID-19.
The only question is how deep the slump gets.
We might get some of the answers in this week's budget. But there is far more that we don't know.