Budget 2021 latest: Sunak prepares to unveil spending plans

What we know so far

In time honoured fashion, there have already been plenty of hints — and some confirmations — about what to expect in the budget. Here are the main points:

  • The UK living wage, which applies to workers aged 23 and over, will rise by 6.6 per cent to £9.50 per hour.

  • The Office of Budget Responsibility is likely to upgrade its forecasts to show stronger growth this year and next.

  • Sunak will try to shore up public finances, and focus public spending on the NHS, regional “levelling-up” strategies and helping struggling families. The Treasury has already announced spending on public transport, skills, galleries and sports and youth clubs.

  • There was a big increase in corporation tax in the March budget, and since then national insurance has gone up to pay for the NHS and social care, so few big tax changes are expected.

  • However there will be a cut in the tax surcharge on bank profits, from 8 to 3 per cent.

  • There will be £1.4bn in grants and other incentives to encourage international investment in British industry.

  • Sunak will announce the end of a one year public sector pay freeze, which will help nurses, teachers and members of the armed forces.

UK stock market dips ahead of Sunak’s budget speech

UK equities dipped and investors piled into gilts as they worried about inflation and waited for chancellor Rishi Sunak to present the government’s 2021 budget later in the day.

The blue-chip FTSE 100 index dipped 0.4 per cent in morning trading, pulled down by energy and mining shares. The yield on the benchmark 10 year gilt fell back by 0.05 percentage points to 1.06 per cent, a two-week low, as investors bought up debt. Yields fall as prices rise.

The pound fell against the dollar, declining 0.3 per cent to buy $1.37, another two-week low.

Sunak is expected to have some room for manoeuvre in the budget, after the UK bounced back more strongly from the pandemic than initially expected and the government pushed through tax hikes for workers and employers in September. He has already announced higher spending on health, regional “levelling up” strategies and skills training, as well as lifting the freeze on public sector pay.

However he faces challenges such as dealing with the massive deficit the UK has accrued to finance emergency fiscal measures during the pandemic, and tempering widespread fears about mounting inflation.

Timings for the day

Chancellor Rishi Sunak will leave number 11 Downing Street this morning, pausing for the traditional photo with the red budget box.

In the House of Commons, there will be prime minister’s questions with Boris Johnson, and Sunak will get up to deliver his budget at about 12.30pm. Budget speeches usually last around an hour. The March budget lasted 50 minutes and was delivered before a largely empty House of Commons, as Covid-19 restrictions were still in place.

Once he has finished, opposition parties will give their response. The Red Book – a document containing details of all the measures that have been announced – will also be published on the Treasury’s website.

Welcome to live updates from the 2021 budget

Welcome to the FT’s live updates on the 2021 UK budget. Chancellor Rishi Sunak is due to deliver his second budget of the year later today, with the economy looking far healthier than it did when he gave the first one in March.

One of the big questions will be how far that recovery has gone, and how much added tax revenues will give Sunak room for manoeuvre.

Alongside the usual budget, there will also be a three-year spending review. Government departments have been lobbying the Treasury for months for funds, and today they will have some indication of how successful they have been.


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