Over the past decade, the government has taken action to restore the public finances to health, reducing the deficit by four fifths. The Budget lays the foundations to address these challenges. And, in common with other advanced economies, the transition to a net zero emissions economy by 2050 will require radical changes in every sector. Productivity remains low compared to other countries and unevenly distributed across the country. Looking further ahead, the UK also faces challenges in the medium to long term. The OBR notes that the spread and impact of a COVID-19 outbreak clearly represents a downside risk to the forecast, but the scale is highly uncertain and the economic impact is likely to be temporary. The Office for Budget Responsibility’s ( OBR) economy and fiscal forecast does not reflect the now global spread of COVID-19 nor an outbreak in the UK. The recent COVID-19 outbreak is creating short-term uncertainty. Employment growth remains strong – the employment rate reached a record high in the three months to December 2019 – and earnings growth remains above inflation. It has a globally competitive tax system, it is home to many highly innovative firms, has a world-beating science and research base, and has sound, independent macroeconomic institutions. It is a Budget that lays the foundations of the UK’s future prosperity and delivers on the government’s promises to the British people. This is the first Budget of a new government, the first of a new decade, and the first since the UK’s departure from the European Union ( EU). In the year that the UK hosts the COP26 UN climate summit, the Budget takes steps to decarbonise the economy and protect the UK’s natural habitats, ensuring that every part of the UK economy is ready for the challenges of decarbonisation, and ready to capitalise on the opportunities to become leaders in the green markets of the future. It provides support for people in every nation and region of the UK to gain the skills that they will need as the economy evolves, so that the nation can seize the opportunities of the next decade and fulfil its potential. The Budget also sets out a plan to invest in research and development ( R&D) and cutting-edge technologies. The government will build on this across the Parliament, creating a tax system fit for the challenges and opportunities of the 21st century.
The Budget supports the government’s ambition for a fair and sustainable tax system that helps people and families with the cost of living, funds the first class public services they expect and creates an environment for business to succeed. The Budget announces investments in the roads, railways and digital networks that will underpin growth over the coming decade, as well as the world-class hospitals, schools, colleges and police forces that people rely on every day.
While the economy continues to face challenges, the government’s careful management of the public finances means that it is able to support the economy in the short term, while investing in the future. The Budget sets out a plan to support public services, individuals and businesses that may be affected by COVID-19. The fundamentals of the UK economy are strong and the government is well prepared to protect people’s health and support their economic security throughout this period of temporary economic disruption. The Budget takes place against the backdrop of the global outbreak of COVID-19.
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