Year: 2020
Type: report
Abstract: IFS Spring Budget analysis Paul Johnson's opening remarksYesterday's Budget was really two Budgets rolled into one.There was the normal Budget setting out medium term tax and spending plans.And then there was the emergency Budget aimed at dealing with immediate potential consequences of the coronavirus.The latter made the former a rather odd affair.All the economic forecasts on which the core Budget was based were put together before any significant effect of the coronavirus was accounted for, and were therefore out of date at the moment of publication.If it turns out that the short term disruption caused by coronavirus is just that -short term -then all is well.Any significant longer term effect, though, and a smaller economy will mean the tax and spending plans set out yesterday will lead to an even bigger deficit than currently planned in the first few years of this decade.So what are the headlines from these two budgets?• The coronavirus package appears to be what was promised: timely, targeted and temporary.At £12 billion it is also substantial.It looks fairly well designed.It remains to be seen whether it will be enough to support public services, support the vulnerable and insulate the economy from long-term effects.• The OBR's economic forecasts are a little more positive than the Bank's, but they are still very weak even before factoring in possible longer term effects from the coronavirus.Projected growth rates averaging barely over one and a half per cent a year for the next five years are feeble and indicative of an economy that is not in a robust position for coping with shocks like the coronavirus.The OBR continues to assume an orderly move to a free trade agreement with the EU.Anything less orderly, or a failure to achieve such an agreement, would weaken an already weak economy even further.• Overall spending will rise by £76 billion or 9% in real terms between 2019-20 and 2023-24, largely paid for by extra borrowing.This will mean the size of the
Author: Paul Johnson
Language: English
Topic: Economic and Fiscal Studies
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: gold
OpenAlex ID: W3011950275