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| UK economy still vulnerable despite budget spending spree | UK economy still vulnerable despite budget spending spree |
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| Rishi Sunak’s plan to win over public with big spending could be thrown off course by coronavirus | Rishi Sunak’s plan to win over public with big spending could be thrown off course by coronavirus |
| If Tory spinners are to be believed, Wednesday’s budget is largely the product of Rishi Sunak’s “phenomenal” work ethic. The new chancellor , they insist, is the main force behind the government’s plan to cast off the shackles of austerity at last. | If Tory spinners are to be believed, Wednesday’s budget is largely the product of Rishi Sunak’s “phenomenal” work ethic. The new chancellor , they insist, is the main force behind the government’s plan to cast off the shackles of austerity at last. |
| Colleagues praised the 39-year-old, who has only been in post since 13 February, as he took the Conservative party in an new direction of big spending, never mind the deficit. | Colleagues praised the 39-year-old, who has only been in post since 13 February, as he took the Conservative party in an new direction of big spending, never mind the deficit. |
| Behind the scenes, however, the decision to embark on a £175bn spending spree can really be chalked up as a victory for Dominic Cummings, Boris Johnson’s chief adviser, who has long been fighting within Downing Street for a loosening of budgetary constraints. | Behind the scenes, however, the decision to embark on a £175bn spending spree can really be chalked up as a victory for Dominic Cummings, Boris Johnson’s chief adviser, who has long been fighting within Downing Street for a loosening of budgetary constraints. |
| It also gives a clear signal of the kind of prime minister Johnson is likely to be, one more concerned about spending enough money to help him win the next election than sticking to the old Tory notions about sound money espoused by David Cameron and George Osborne. | |
| Sajid Javid, who was effectively forced out as chancellor because he resisted No 10’s control, had wanted a very different budget that was more cautious about raising spending, with potentially bigger personal tax cuts as well as tax-raising measures. | Sajid Javid, who was effectively forced out as chancellor because he resisted No 10’s control, had wanted a very different budget that was more cautious about raising spending, with potentially bigger personal tax cuts as well as tax-raising measures. |
| Javid said in the Commons that he recognised much of the contents of the budget, but some in Downing Street said his main focuses had been dropped, and claimed Sunak was now working much more smoothly with Johnson’s top team following the creation of a new joint unit of No 10 and No 11 advisers. | Javid said in the Commons that he recognised much of the contents of the budget, but some in Downing Street said his main focuses had been dropped, and claimed Sunak was now working much more smoothly with Johnson’s top team following the creation of a new joint unit of No 10 and No 11 advisers. |
| Treasury sources say Javid had been passionate about spending billions on improving the skills of young people in further education, reflecting his own background of having attended Filton technical college, but that No 10 did not really care too much about that agenda. In his short few weeks in charge, Sunak has been much smarter about aligning his own interests with those of No 10, they said. | Treasury sources say Javid had been passionate about spending billions on improving the skills of young people in further education, reflecting his own background of having attended Filton technical college, but that No 10 did not really care too much about that agenda. In his short few weeks in charge, Sunak has been much smarter about aligning his own interests with those of No 10, they said. |
| The new chancellor was once an Osbornite, championing the need for Britain to “live within its means” and end “irresponsible borrowing”, but his aides claim these are now different times, and that Sunak is simply responding the circumstances. | |
| With not just Sunak but almost the whole Tory party now converted to big spending, the translation is that Cummings has once again won the internal argument, putting what the Tories think are the priorities of their new northern and Midlands voters first: more spending on public services, better transport infrastructure and broadband access. | With not just Sunak but almost the whole Tory party now converted to big spending, the translation is that Cummings has once again won the internal argument, putting what the Tories think are the priorities of their new northern and Midlands voters first: more spending on public services, better transport infrastructure and broadband access. |
| The small print also contains some of the No 10 adviser’s pet projects, including £800m to set up a new advanced research projects agency, and research and development spending has been hiked to £22bn. | The small print also contains some of the No 10 adviser’s pet projects, including £800m to set up a new advanced research projects agency, and research and development spending has been hiked to £22bn. |
| As for how to cover the £175bn price tag, the red book shows just £28bn of tax revenue raised from policy measures over the same five-year period. | As for how to cover the £175bn price tag, the red book shows just £28bn of tax revenue raised from policy measures over the same five-year period. |
| The government is relying on billions saved from spending on the EU budget to make up part of the gap, but extra borrowing for capital investment will also play a major part in paying for the spending splurge. The Conservatives’ fiscal rules set by Javid in December are very likely to be junked as part of a forthcoming review. | |
| The spectre hanging over the budget, however, was the threat of coronavirus, with neither the £12bn of emergency measures to help workers and business, nor the overall likely effects on the economy taken into account in either the Treasury or Office for Budget Responsibility’s calculations. | The spectre hanging over the budget, however, was the threat of coronavirus, with neither the £12bn of emergency measures to help workers and business, nor the overall likely effects on the economy taken into account in either the Treasury or Office for Budget Responsibility’s calculations. |
| The plans of Johnson and Cummings to win over the public with big spending could yet be thrown off course if the coronavirus leads the UK, and possibly the world, into a recession. Sunak will try to stress his quick actions to mitigate the impact on the economy, but governments in charge when a downturn hits are likely to pay a price at the ballot box regardless of how much they are to blame – as Labour learned to its cost in 2010. | |
| So while Labour MPs looked glum about Sunak’s decision to turn on the fiscal taps, the new chancellor still faces a perilous time ahead. In the end, vast amounts of spending on roads or broadband infrastructure will seem to matter very little if the coronavirus wreaks havoc on jobs and businesses. | So while Labour MPs looked glum about Sunak’s decision to turn on the fiscal taps, the new chancellor still faces a perilous time ahead. In the end, vast amounts of spending on roads or broadband infrastructure will seem to matter very little if the coronavirus wreaks havoc on jobs and businesses. |