Rishi Sunak's first budget is 'economic shock and awe'
The budget details a monumental increase in spending - some in future years and some immediately on the coronavirus.
Wednesday 11 March 2020 19:31, UK
There were two budgets announced in the Commons today.
The first was the one the chancellor (and his predecessor) had clearly been planning for some time: the one about "getting it done".
This budget was laid out in vivid detail in the budget documents: it would include a dramatic increase in public spending over the coming years.
It would constitute the biggest giveaway since Norman Lamont's 1992 Budget. It would mark a major shift in the Tory party's political direction.
If austerity ended under Philip Hammond, this budget is all about, well, splurging. Splurging on public services and splurging on investment.
More roads and railways, more infrastructure like broadband. And a fair bit more debt.
The deficit will nearly double in the final year of the forecast horizon, up from £33bn in 2023/24 to £60bn.
However, the chancellor has just about managed to meet his fiscal rules - in part because those rules are less tough than the ones Mr Hammond had, in part because the deficit is starting from a low position and the interest rates on that debt are going down rather than up (more on rates in a moment).
But that was not the only budget today. In fact, for many people it was the least relevant bit Rishi Sunak announced.
His other budget was a very different beast: a swathe of measures aimed at supporting businesses and households throughout the coronavirus outbreak.
In an unprecedented move, these measures, which total about £12bn, were added so late that they aren't even included in the budget's main table of measures.
The COVID-19 measures, which range from funding for sick pay to a business rates holiday and more besides, are both big but also quite forensic. The chancellor held back from the more dramatic economy-wide kinds of measures some thought he might resort to.
However, like much else in this budget the COVID-19 package begs more questions than it answers. How will it be funded? All through borrowing, presumably. Will the chancellor meet the fiscal rules once that extra £12bn is borne in mind? What will actually happen to economic growth in the coming months? The OBR said the GDP forecasts it unveiled today do not include the full expected economic impact of the virus.
The Treasury and OBR cannot be blamed for the fact that the virus onset and the associated economic effects are happening so fast that they can barely account for them. Yet it is a reminder that this crisis is still in its early days. It may well be that the chancellor has to return to the Commons with further stimulus measures as the COVID-19 outbreak continues.
Still, when you combine the measures from the Treasury today they add up to a monumental increase in spending - some in future years and some immediately on the virus. When you consider that they came on top of an emergency cut in interest rates from the Bank of England, we really are talking about economic shock and awe.