Government spending

Tuition fees from international students account for nearly a fifth of total income of the higher education sector. A big drop in international students would imperil university finances.

The Chancellor has introduced workable and generous income protection schemes for most employees and self-employed people that lose work as a result of coronavirus. But there are some groups who have seen no increase in protection.

The Debt Management Office announced yesterday that in order to finance the Government’s response to the Covid-19 outbreak it intends to auction £45 billion of gilts this month. This would be a record. It is highly likely that the amount that needs to be raised over the new financial year will be the highest, as a share of national income, since 2009–10 and it could even exceed that peak. With an increasing amount of gilts set to be bought by the Bank of England the public finances will in future be even more exposed to changes in short-term interest rates.

Isabel Stockton, a research economist at the Institute for Fiscal Studies, said: “The response to the covid-19 pandemic has led to a sharp downturn in economic activity. It has also, rightly, prompted a substantial fiscal policy response, the cost of which will add directly to government borrowing.

The differences between UK regions are rooted in history going back decades, even centuries. Having fundamental effects on them will require reallocating capital spending for sure, and a whole lot more.

This presentation was delivered as part of the IFS press briefing following the Spring Budget 2020.

This presentation was delivered as part of the IFS press briefing following the Spring Budget 2020.

This presentation was delivered as part of the IFS press briefing following the Spring Budget 2020.

These remarks were delivered at the IFS presentation following the Spring Budget 2020.

This presentation was delivered as part of the IFS press briefing following the Spring Budget 2020.

Much has been made of the Government’s promise to ‘level up’ across the UK.

It looks likely that responding to the coronavirus outbreak (covid-19) will be at the centre of Wednesday’s Budget. We look at some of the options the Chancellor has.

If the pattern observed in the first ten months of the financial year continues for the next two, government borrowing will be £44 billion this year. This would be £3.5 billion lower than implied by the OBR’s restated March 2019 forecast. But it is worth recalling that just four years ago, in March 2016, a surplus of £10.4 billion was forecast for this financial year: i.e. we have seen a deterioration of around £55 billion in four years.

"If we want more spending, we’ll have to pay for it. That, eventually, must mean more taxes." Paul Johnson surveys Rishi Sunak's choices ahead of the 2020 Budget.