Kate Andrews

It’s no surprise that the bill for Covid-19 keeps racking up. The Office for Budget Responsibility's latest forecast predicts borrowing will reach £355 billion for the financial year: decisions to extend furlough, boosting public sector spending and supporting businesses that have been closed for months at a time all come with a price tag attached. But that doesn’t stop the sums from creating shock and awe each time they’re announced. Today’s update from the Office for National Statistics shows that government borrowing hit £19 billion last month — more than £17 billion from the previous year and the highest borrowing recorded for February since records began in 1993.  Source: ONS.

Speaking to BBC Radio 4’s Today programme this morning, Andrew Bailey threw his support behind one of the more optimistic scenarios for a post-Covid economic recovery: that the UK will be back to pre-pandemic levels by the end of the year. The combination of the UK’s hugely successful vaccine rollout combined with increased levels of lockdown immunity – that is, the economic impact of restrictions ‘reducing as we all adapt’ – had the Governor of the Bank of England suggesting that we could see a full recovery by the end of the year (notably earlier than the Office for Budget Responsibility’s Budget forecast of roughly the middle of next year).

Last week The Spectator highlighted new data from the OECD that offers a weekly update comparing a country’s current GDP levels to the previous year. It continues to show the UK experiencing some of the highest levels of economic damage. If you factor in lockdown stringency, you can also make out a rough correlation between countries under the strictest lockdowns and countries taking the biggest hits to GDP. Just how reliable are these calculations? A cross-check between the OECD data and the Office for National Statistics' monthly GDP update would suggest it’s pretty spot-on, if not slightly more positive. Today’s update from the ONS shows the economy to be 9.2 per cent below where it was in January 2020.

Last week Rishi Sunak presented his second Budget to the House of Commons. Today, three former Chancellors weighed in. Speaking at an online event hosted by the Institute for Government, Norman Lamont, Alistair Darling and George Osborne joined the Institute's director Bronwen Maddox to discuss the state of the UK economy, and how their past experiences lead them to reflect on recent events. There was a surprising amount of consensus from the panel – not on the best way to handle or manage the economy, but about what is politically possible. Fuel duty came up multiple times as an area of policy that doesn’t gel with the government’s stated commitments to a green agenda; yet it was, and continues to be, an area the former Chancellors agreed was off-limits.

Rishi Sunak’s tax hikes pack a punch: by 2025, over £19bn is estimated to be raised from the freeze to the personal tax threshold, and a staggering £50bn from a new, tiered corporation tax structure. That’s a lot of people out of pocket, and businesses diverting their profits away from workers and consumers and towards the state. Criticisms of the cash grab are splashed across the front pages of the papers today. Across the pond, the Wall Street Journal has lambasted Sunak’s policies: 'Britain’s political class, and especially the governing Conservative party, prides itself on fiscal rectitude. So Mr. Sunak already faces pressure to “pay for” all this relief. We sympathise, but in this instance he would have been better off waiting.

‘Do you miss me yet,’ Donald Trump asked the crowd in his opening remarks at the Conservative Political Action Conference this afternoon: the most important annual conference for the Republican party. The former president was given the keynote address at CPAC, with anticipation that he might have a big announcement to make about his future plans, including the possibility of another run for the White House. In a speech that ran for roughly 90 minutes, Trump never committed himself to a 2024 bid, but he teased it several times. ‘I may even decide to beat them for a third time,’ he said at the start of the speech: the first of many references to what he continues to claim was a ‘rigged’ election, despite having these allegations shot down in the courts.

We already know much of what will be in Rishi Sunak’s Budget next week. Another £30bn for Covid-relief measures: furlough scheme into the summer, stamp duty holiday and the uplift in universal credit (which is also expected to be time-limited, despite pressure from the opposition to make a permanent adjustment). But this year’s spending splurges are becoming a footnote in a Budget dominated by the prospect of tax rises, for which the Chancellor is already receiving backlash from the left and right. Rumours of a corporation tax hike, circling for a week now, have not been denied. There’s also talk of capital gains tax coming under the Treasury’s spotlight, with some saying that Sunak aims to align it with income tax.

As the Prime Minister announced the details of his government’s ‘roadmap’ out of lockdown in the Commons on Monday, no doubt some will have been cheering on the announcements, which will allow them to keep their pre-planned parties or holidays scheduled in their diaries. But the timeline has painted a grim picture for business in the months to come. According to the timetable, we are nearly two months away from outdoor dining being made legal again, and three months away from a return to indoor dining.