Britain to announce one-year government spending plan

Britain’s Finance Minister Rishi Sunak will today announce a limited one-year plan for government spending intending to revitalize the economy.

U K finance

Photo: Tolga Akmen/AFP

Britain’s Finance Minister Rishi Sunak will today announce a limited one-year plan for government spending intending to revitalize the economy.

Funding is expected to center around infrastructure projects and public services strained by the COVID-19 pandemic, while investing in often overlooked regions, particularly the country’s North. Investments in hospitals, roads, railways and broadband networks were listed as priorities in an earlier March budget but were put on hold due to COVID-19.

How the government intends to fund these projects remains unclear, putting pressure on Prime Minister Johnson’s administration to address ballooning deficits in the medium-term. While expensive, fiscal stimulus programs are popular throughout the country and cutting social services during the pandemic appears untenable. Sunak will likely resort to increasing certain household taxes, such as taxes on capital gains, in order to avoid the public backlash afforded to his austere predecessors. However, the timing of such changes remains murky while uncertainty over public health and a possible no-deal Brexit continues to loom. Expect Sunak to hold off on budget balancing measures until a sustainable economic recovery is firmly underway or widespread inoculation is possible, likely early to mid-next year.

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