Spend it now and pay it later is the theme concept of our Chancellor Rishi Sunak’s UK budget 2021. The budget 2021 announcement is aiming to create thousands of jobs, economic recovery, and economic growth for post-Brexit United Kingdom. This is probably the most challenging budget for any Chancellor in the UK as the government’s borrowing has now exceeded £270 billion which is the highest level of debt in British history apart from the emergency period of WW1 and WW2.
As lockdown restrictions have occurred due to the coronavirus pandemic, many jobs have been lost, reducing people’s income and further impacting business survival, even forcing some to shut. The 2021 budget is a plan to restore economic growth, and this blog will consider and critically evaluate this approach.
Although the government is planning to initiate the start of the coronavirus debt from 2023 by increasing corporation tax and freezing personal allowance to £12,500, there is a corporation tax loophole that has been introduced in this budget.
Coronavirus support
Business support
Housing
Health
Arts and sport
Alcohol and fuel
The 2021 budget is seen as a major step to increase economic growth to the optimum with forecasts predicting that the economy should recover to its normal size by the middle of next year. It has been estimated by the Office for Budget Responsibility that the GDP will grow by 4% this year and increase to 7.3% next year.
However, Sir Keir Starmer has claimed that the budget is unreasonable as it does not account for the loans which are in excess of £70,000, and businesses are required to pay this back regardless of whether their company is profitable or not, which is economically illiterate. The budget is considered by many as a quick fix and not a long-term solution.
It has also been argued that, although the Chancellor has recognised that the bricks and mortar retail businesses require support, the business rate relief is only a temporary fix. There is no equivalent relief on empty units which seems unsound to many retail property owners.
The Chancellor’s decision has been repelled on the basis that license fees, inheritance tax and capital gain tax should be abandoned as these taxes affect economic activity and there’s an uneven affect on different parts of the economy.
Overall, the budget gives rise to hope for UK economic recovery, helping distressed businesses, but there are still some problems such as improving stamp duty taxes and widening information that relief businesses, such as airports, could receive due to losses faced.
According to the government’s plan, the economic growth rate is positive if the economy opens up in accordance to the government’s current plan for the COVID-19 lockdown roadmap. If the coronavirus pandemic is out control again then the budget will need to be revised. The 2021 budget is different from any other budget in the UK’s history; the budget is definitely good news for small businesses and the overall UK economy.
However, the government should have allocated more focus on a greener economy and renewable energy. In order to revolutionise the UK’s post-Brexit manufacturing industry, the government needs invest more on renewable energy, develop more IT infrastructure and green technology.
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One Response
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