The Chancellor of the Exchequer, Shi Sunak, left 10 Downing Street after attending a Cabinet meeting on February 14, 2020.
Barcraft Media
As British Finance Minister Shi Sunak prepares to determine the country’s economic path to recovery, analysts are agreeing to the possibility of additional tax increases and future fiscal austerity.
With the budget coming up on March, the nationwide Covid-1 restrictions are set to gradually become unwarranted in the coming months, resulting in a full resolution on June 21. Meanwhile, more than 200 million people in the UK have now received the first vaccine. Dosage.
Sunak told the BBC over the weekend that his budget would “provide support”, but warned that giving a “shock to the economy” would not be a quick fix.
The government has started unprecedented public spending as the economy contracts sharply in more than 100 years by 2020. At Sunak’s last financial announcement in November, he presented the country’s largest peacetime budget on record.
UBS According to economist Dean Turner, the government is widely expected to replace some of the government’s support beams for the economy until the sanctions are eased by Sunak, especially to prolong the furlough plan until at least June to stave off the unemployment crisis, according to UBS economist Dean Turner Global Management.
“Following the Chancellor’s announcement of a 5 5 billion company grant scheme, we may see conditions for granting more liberal terms to the companies announced, as well as an increase in tax breaks to help payers, whose hopes will be final. And decisively, then recovery, ”Turner said in a statement Monday.
Morgan Stanley analysts expect a 20 20 billion package, including a furlough extension, a targeted support program for epidemiologically sensitive areas, and a one-time payment of universal credit to benefit claimants affected by the end of the week’s £ 20-bust.
Tax increase?
According to Public Fees for Budget Responsibility (OBR), the UK has spent ૨ 555 billion (77 777 billion) in direct financial spending since the onset of the epidemic, warning of public survival. Money.
As a result, some analysts cautiously expect the Chancellor to raise some cash in the budget on Wednesday.
Jacob Nell, head of European economics at Morgan Stanley, and Bruna Scarica, a UK economist, said the company could announce a tax increase of 21 per cent, possibly from early autumn, with the introduction of sales online sales tax and further action on green tax.
“As the UK and its financial outlook remain sharper than its US and euro area counterparts, Chancellor Sunke stressed the need to put public finance on sustainable action in the wake of the epidemic,” Nell and Scarika said in a note on Friday.
“While we expect them to sound the hawkish next week, and in the form of a down payment on its purpose – perhaps a billion billion dollars – to raise some taxes, we will see it announce financial tightening – 2% of GDP in taxable form – only in the fall. ., Will take effect in April 2022. “
Overall, Morgan Stanley predicts an additional આવક 5 billion in tax revenue this fiscal year, up from 10 billion next year.
“We think further monetary tightening – 2% of GDP – will be announced in the fall, the UK will clearly recover from Covid – 19,” they said in a note on Friday.
However, UBS’s Turner suggested that after a better-than-feared fourth quarter for the UK economy, the government’s financial position may not be as fragile as was reported by the last OBR. As a result, UBS does not expect an immediate tax increase, but suggested that future changes in corporation tax, pensions and income tax thresholds are likely to be signaled along with other modest tweaks.
The mattress should not be taken out
Ruth Gregory, a senior economist at Capital Economics, said the UK’s more-than-expected fourth-quarter means the government’s forecast could improve, but he warned that a premature uninterruption of financial support could be detrimental to the recovery.
OBR currently projects that the economy will be 3% lower than its pre-epidemic by 2026, with a budget deficit of approximately અ 100 billion (3.9% of GDP) in 2025/26.
Gregory determined that if Sunak wanted the budget deficit to return to pre-epidemic levels by 2026, it would have to tighten monetary policy with an annual fiscal 45 45 billion.
“If the government wants to raise taxes as soon as possible so that the tax increase doesn’t happen before the 2024 general election, then it’s likely that the chancellor will take the first steps to withdraw some of the revenue in this budget,” she said.
However, he suggested that the immediate priority would be to prevent long-term economic weakness, and that Sunak would now be the material for a sign of tighter intent in future financial announcements.
Capital Economics expects Sunak to announce monetary policy easing in 2021/22 compared to current plans of about ડો 25 billion (1.2% of GDP).
“But the risk is that, over the next two years, it will be tempted to pull the mattress from under the feet of homes and businesses, reducing the budget deficit at a faster pace than currently set,” Gregory said.
“Not only will economic recovery weaken economic recovery, but it could also cause more problems than the announced financial solutions.”
.
