On 23 March 2022, the chancellor will deliver his spring statement, which could be a full-blown budget if he feels compelled to announce major new policies. It will be a difficult statement for Rishi Sunak against a backdrop of the cost of living crisis, arising from high inflation compounded by tax rises.

The Office for Budget Responsibility, the independent fiscal watchdog, will publish a new economic forecast. That will lay bare the extent of the expected squeeze on incomes over the coming months and years. It will also set out the latest fiscal numbers, which will determine whether the chancellor has any scope for giveaways on tax or spending – or whether, conversely, he needs to plug a further hole in the government’s finances.

Sunak will need to decide whether, and how, to respond. He has already announced measures to protect households partially from rising energy prices, but he could yet come under pressure to do more. While he and Boris Johnson have been firm that planned tax rises will go ahead in April, that commitment may be tested too.

Original source – The Institute for Government

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