World Insights: UK gov't unveils package of proposals in Budget 2021 to set recovery path

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LONDON, March 4 (Xinhua) -- British Chancellor of the Exchequer Rishi Sunak unveiled Wednesday a package of proposals in Budget 2021 to set path for the country's economy to recover from the impact of the COVID-19 pandemic.

Delivering the budget in parliament, Sunak vowed to build back better by a three-step plan, with measures covering extending a couple of schemes, strengthening public finances, and highlighting investment-led recovery.

"First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis," said Sunak.

The immediate priority "continues to be supporting those hardest hit, with extensions to furlough, self-employed support, business grants, loans and VAT cuts -- bringing total fiscal support to over 407 billion pounds (567.84 billion U.S. dollars) ," according to the Chancellor's plan.

"Second, once we are on the way to recovery, we will need to begin fixing the public finances -- and I want to be honest today about our plans to do that," said the Chancellor.

Sunak noted that the public finances should be "back on track" and will raise the rate of corporation tax to 25 percent from 19 percent since April 2023, in a bid to boost revenue and maintain the internationally competitive tax system.

"Even after this change we'll still have the lowest corporation tax rate in the G7," he added.

Sunak announced the first eight freeport locations in England, including East Midlands Airport, Felixstowe&Harwich, Humber and Liverpool City Region. The designation aims to enhance investment, stimulate innovation and cut costs.

"New freeports will encourage free trade and reinforce our position as an outward-looking, trading nation, open to the world," said Sunak.

Meanwhile, he said the British economy is expected to grow by 4 percent in 2021 and 7.3 percent in 2022, based on forecasts by the Office for Budget Responsibility (OBR), the official independent statistics body.

According to the OBR, the British economy is expected to "return to its pre-pandemic level by mid-2022" with the rapid rollout of vaccines and easing of lockdown restrictions.

Meanwhile, the chancellor set out new visa reforms aimed at attracting "highly skilled migrants," including a fresh unsponsored points-based visa to court talents in science, research and technology sectors.

On the new budget, Jonathan Geldart, director general of the Institute of Directors, a business organization for company directors, senior business leaders and entrepreneurs, said, "this budget delivers a solid platform for many businesses to relaunch as the economy reopens."

Geldart said the chancellor's efforts to "combine life support for the economy with measures to turbocharge growth is the right call," but urged the government to provide more stimulus for businesses.

"Overall there is much for businesses to get behind in this budget, and the Treasury should remain prepared to extend support if the roadmap goes off course, whilst building on its stimulus package today to drive long-term growth well beyond our immediate recovery," added Geldart.

Tony Danker, director-general of the Confederation of British Industry, another business organization, said the budget "succeeds strongly in protecting the economy now and kickstarting recovery", while noting that "moving to 25 percent corporation tax will cause a sharp intake of breath for firms."

"UK must remain attractive for every business from high-growth homegrown firms to global firms investing in UK," he said, looking forward to working with government with "a laser focus to drive competitiveness."

Ben Zaranko, a research economist at the Institute for Fiscal Studies, an independent microeconomic research body in Britain, said the chancellor "largely stuck to his pre-existing plans for public service spending -- plans which imply spending less in the medium-term than the government was planning pre-pandemic."

"Given the substantial and mounting pressures on the National Health Service, schools and other services, one has to wonder whether these spending totals have been set implausibly low so as to flatter the public finance forecasts," Zaranko added.

Currently, England is under the third national lockdown since the outbreak of the pandemic in the country. Similar restrictive measures are also in place in Scotland, Wales and Northern Ireland.

British Prime Minister Boris Johnson announced earlier a four-phase "roadmap" to ease the current coronavirus lockdown, with "cautious" steps to restore normal life and economic activity by June 21 this year. Enditem

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