With a third national lockdown now in place, the Budget in March is unlikely to make any hard decisions. Even before the pandemic experts were warning that the government would need to raise taxes or cut spending to meet its legislated ‘fiscal mandate’. Having rejected a return to austerity at the last election and after promising not to raise any of the ‘big three’ – income tax, national insurance and VAT – this was always going to be tricky.
The pandemic has only sharpened these concerns. The past nine months have involved the provision of vital support, and not a little waste, piling up an additional £400bn pounds of borrowing. Despite this, many people have lost their jobs and some companies have closed, as the extended economic deep freeze takes its toll. With this backdrop, raising taxes on incomes or spending in the near future looks like a tough ask.
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