The Chancellor’s plans, to be revealed in Parliament on Wednesday, will rely on predictions showing the devastating effect of
The Office for Budget Responsibility is expected to forecast that the pandemic will still be weighing on the economy in 2024.
By this point, it will have cost as much as 3 per cent of national income – £60billion in today’s prices.
Rishi Sunak plans will be revealed in Parliament on Wednesday and will rely on predictions showing the devastating effect of coronavirus
An ally of the Chancellor said the forecasts were ‘going to be quite scary’ compared with those drawn up in March. A Downing Street official added: ‘It’s not looking pretty.’
The OBR looks likely to follow the Bank of England in predicting the economy will shrink by almost 11 per cent in 2020, the worst annual performance in three centuries.
The deficit is expected to reach a peacetime record of almost £400billion in 2020-21 and still be above £100billion by 2024-25, the Financial Times reported.
The bleak economic outlook coupled with the Government’s commitments to spending money on ‘levelling up’ the North and a ‘green revolution’ will force Mr Sunak to make tough decisions on taxes and public spending.
An estimated £40billion a year will need to be generated in tax rises, according to the Institute for Fiscal Studies and the Resolution Foundation.
An ally of the Chancellor said the forecasts were ‘going to be quite scary’ compared to what was seen in March
Sources said Mr Sunak does not believe it is the right time to raise taxes or cut spending but is determined to use next week’s statement to signal he is serious about tackling the damage caused by the pandemic.
A well-placed insider said: ‘We’ve got to show that we are making a start.’
David Gauke, a former Treasury minister, said there was ‘not yet an appreciation’ of the seriousness of the fiscal situation.
‘Once we are beyond Covid and its immediate after-effects, this will move centre stage,’ he added.