Chancellor Rishi Sunak ‘risks killing off Britain’s Covid recovery if he hikes taxes too quickly’
RISHI Sunak risks killing off Britain’s Covid recovery if he raises taxes too fast, a think tank warns.
The Chancellor is also advised to extend bailout schemes in his Budget — but not for too long.
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The silver-lining to the lockdowns is that Brits are sitting on £125billion in savings, the respected Institute for Fiscal Studies added.
And if families spend this cash, they will help the country claw out of recession.
The IFS said “sizeable tax rises” are looming as the Treasury has to beef up public spending to start balancing the books.
But they told Mr Sunak “substantial tax rises should not be part of the Budget”.
IFS’s Paul Johnson said: “He must strike a balance between continuing support for jobs and businesses, and weaning the economy off blanket support.
“Any significant continuation of the furlough scheme must be carefully targeted.”
The Treasury has underestimated how much cash it must plough into public services in the next few years, the IFS claimed.
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Mr Johnson added: “It is possible growth will be fast enough that big fiscal deficits will largely dissipate.
“But that is not a central expectation — more likely we are on track for ongoing unsustainable deficits.”
Mr Sunak is considering raising Corporation tax, scrapping the stamp duty holiday and ditching the freeze in fuel duty in his Budget due on March 3.
The Sun Says
AMID all the back-slapping about the vaccine roll-out, and hopes of returning freedoms, it cannot be forgotten that the economy is still in intensive care.
The Prime Minister’s roadmap will be critical to financial recovery, but so too will Rishi Sunak’s Budget.
The Chancellor has played a blinder through the pandemic by keeping the fragile economy on life support, but a wrong move now could pull the plug on the crucial bounce-back.
The respected Institute for Fiscal Studies is the latest to warn that any hike in taxes in the Budget could kill off the recovery before it has a chance to get going.
At the same time, there is yet more evidence of the perilous state of the hospitality and entertainment industries, which desperately need to re-open soon — and with an extension to the VAT reduction.
No tax hike can immediately fill the black hole in Britain’s finances caused by Covid, but a strong economy could do it over time.
Those Brits lucky enough to have saved a combined £125billion over the past year will also help, but not if there are no businesses left for them to spend that money on.
The economy needs a boost, Rishi, not a kicking while it’s down.
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