This week’s Budget will build on measures taken to protect businesses during the pandemic and pave the way for a “strong, jobs-led recovery”, Boris Johnson has said.
But the Prime Minister emphasised warnings made by the Chancellor on the importance of being “frank” about the challenges the economy faces due to the coronavirus crisis.
There has been widespread speculation about what will be included when Rishi Sunak delivers his Budget on Wednesday, with reports suggesting that officials are considering plans to increase corporation tax from 19% to 25%.
Labour has warned Mr Sunak against immediately raising taxes, urging him instead to focus on securing the economic recovery following a year of financial disturbance.
During a visit to Stoke-on-Trent on Monday morning, Mr Johnson told reporters: “I’m not going to anticipate what the Chancellor is going to say on Wednesday.
“But I am absolutely confident that it will be a Budget that builds on everything we have done to look after the businesses and the people of this country throughout the pandemic.
“But that also paves the way for a strong, jobs-led recovery. That’s what our focus is going to be on.”
Mr Johnson raised comments made by the Chancellor about the need to be “frank with ourselves” about the state of the public finances.
“Yes, of course, it’s been expensive to look after everybody throughout the pandemic,” the Prime Minister told reporters.
“But I have no doubt that, if we get it right, as I’m sure we can, we can have a strong, jobs-led recover, that I think could be much stronger than many of the pessimists have been saying over the last six months or so.”
On Sunday, Mr Sunak indicated that he will extend emergency support packages, such as the furlough scheme due to expire at the end of April, as lockdown measures are eased in the coming months.
But he said he must repair the public finances from the “enormous shock” of the pandemic with an “honest and fair” plan, with possible tax rises on the horizon.
Shadow chancellor Anneliese Dodds said on Monday that now is “not the time” for tax rises, but signalled that she could support an increase in corporation tax in the future.
She used a Bloomberg speech to urge Mr Sunak against hitting families with a “triple hammer blow” of council tax rises, social security cuts and pay freezes.
Elsewhere, the Chancellor is coming under pressure from northern Tories to support high streets by permanently reducing business rates for retailers.
Forty-five MPs from the Northern Research Group (NRG) called for an extension of the business rates holiday to be followed by “fundamental reform” after the pandemic.
A group of more than 60 female MPs and business leaders has also warned Mr Sunak that the economic impact of lockdown on women is being “overlooked” and “turning back the clock on Britain’s working women”.
Commons Women and Equalities Select Committee chairwoman Caroline Nokes is among those calling on the Chancellor to cut VAT for hair and beauty salons and extend the business rates holiday to the end of the pandemic, in a letter to the Daily Telegraph.
A number of measures in Mr Sunak’s statement to MPs have been trailed in advance, including a £1.65 billion boost to the vaccine rollout to help meet the target of offering a dose to every adult by July 31.
Mr Sunak will also divert £22 million to fund a “world first” trial to test if different vaccines can be used together, or if a third dose is effective, according to the Treasury.