The UK Chancellor of the Exchequer Rishi Sunak has announced his 2021 UK budget. As expected, the budget was dominated by Covid-19. It was revealed that pandemic-related spending will reach £507bn for 2020/21. The 2021 UK budget focused on ways of helping the UK economy successfully emerge from a third lockdown. This is to combat continued fears of mass unemployment and widespread business failure once furlough ends. Rishi Sunak described the government’s overall response as being fair to everyone.
UK Borrowing higher than both World Wars combined
Furlough has been further extended in face of redundancy fears. The furlough scheme was due to end at the end of April this year. However, the Chancellor announced today that it would be continued to the end of September. The news is already being welcomed by worker groups, particularly those in sectors such as hospitality and high street retail. This is in direct response to concerns of record job losses. The treasury also responded to criticism that the furlough scheme has overlooked too many workers. Sunak announced an additional 600,000 people will now be eligible for grants. This includes more self-employed people, many of whom have been unable to receive any government help.
Job seeker and hirer support to continue
The 2021 UK budget also contained details of schemes designed to help UK businesses. This included an additional £5bn in support for firms hit hardest during the lockdown. This support will include individual grants of up to £18,000 for businesses. Furthermore, an additional £520m has been created for small firms to improve their software and training in a bid to boost productivity. The Chancellor also repeated the government’s commitment to the long-term unemployed. He highlighted the Kickstart scheme for under 25’s and the Restart scheme for older workers. These courses involve paying companies to hire and train new workers for at least six-months. However, the Kickstart scheme has already come under criticism. The Labour Party leader today claimed the scheme has helped just 2,000 people in its first six months.
2021 UK budget – debt to peak in 2023-24
Rushik also drew attention to the damage done to the UK economy by the pandemic. He warned that he would be taking measures to repair this. However, he said any such tax rises would only occur once the economy begins to recover. This follows the announcement that borrowing for 2020/21 is around £355bn. The UK economy experienced a record fall of around 9.9%. This was its biggest annual decline for 300 years. However, The Bank of England is now predicting the UK economy will grow 5% in 2021 thanks to a successful vaccine rollout.
The Chancellor did not reveal when taxes would rise but did say he would be reviewing the issue later in the year. This was not a surprise, with many experts claiming too much uncertainty still exists. Rushik also announced that corporation tax would rise to 25% in 2023. He says the delay is to allow business to fully recover from the effects of the pandemic. It was noted that this was still the lowest rate in the G7. There will of course be some backlash to any rise in taxes. However, many government officials are claiming constituents and businesses understand there are going to be bills to pay. As such, there has been a growing feeling that it is more a question of when tax rises will appear, rather than if.
Skilled foreign workers – the UK wants you
The chancellor also set out commitments for a stronger future for the UK economy. One of the biggest announcements related to this was increased investment in the green industry. This includes a new UK infrastructure bank being created specifically to finance green investment. This new bank will begin with an initial £12bn in capital. Rushik also promised to help small businesses better adapt for the future.
One such program he mentioned was Help to Grow. This scheme aims to help SMEs get access to word-class management and digital training. The scheme starts today and is predicted to help more than 100,000 businesses. Finally, the Chancellor also released news of new visas for skilled foreign workers. This is part of the government’s drive to position the UK as a leader in sectors such as IT and science. The new visa process is designed to encourage talent from other countries. The scheme will feature a quicker, more streamlined application and approval process.
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