Thread by @lewis_goodall

ANALYSIS

- Clearest sign yet of Conservatives grappling with their new electoral coalition and the political geography created by the 2019 general election
-Local/mayoral elections also clearly in mind.
- Economically for the next few years steady as she goes.

https://twitter.com/lewis_goodall/status/1367092065503506438

-but after that bigger changes to corporation tax/personal taxation and Sunak hinted might be more to come to "Pay off" cost of pandemic.
-Question is- why? As I reported last night, BoE financing our deficit/long maturity of our debt means pressure is minimal.
-Esp so given...

...OBR is forecasting pretty weak below trend growth beyond 2022. Many economists will argue best way to tackle debt and deficit is through growth and inflation.
-Other question is why set that out now, when there's so little foresight of what economy will look like.

-Nonetheless, although it was a traditional Conservative emphasis on deficit reduction, it was an untraditional way of doing it, focussing on taxation rather than spending cuts- a substantial change compared to the Osbornite approach.
-But if Chancellor is serious...

...about deficit reduction, I suspect spending cuts or severe restraint will return. And in that case, given huge pressure to come on NHS/Social care/education, is going to be a problem (areas of spending which didn't get much of a mention/sense of plan).

-Also no sense of plan on welfare beyond extension on UC til October. Would be astonished if it isn't extended again given economic situation for those families will barely have improved. In which case, begs the question, what is point of these one off measures?

And no mention of Brexit which whether you're pro or not, cannot be denied is having a major effect on the operation of thousands of British businesses.

According to OBR Chancellor already making future spending cuts in departmental budgets “around £4bn a year more of annual departmental spending plans”

OBR says tax rises announced in the budget takes the tax burden from 34% to 35% in 2025-26- its highest level since a Roy Jenkins was Chancellor in the late 1960s.

This is crucial. There are huge questions around how the NHS catches up with the enormous backlog that has been created as well as ongoing pandemic related costs (not to mention soc care)-these are the huge unanswered questions from today with big potential fiscal consequences.

"Faced with these post-pandemic pressures, the Government has so far cut more than £15 billion a year from departmental resource spending from 2022-23 onwards, setting up a challenging Spending Review later this year."

Necessary reminder for all the talk of sky high public spending. OBR forecasts that as a share of GDP it will shortly return to levels just above that of the last 15 years or so.