Rishi Sunak’s Budget on March 3 will be drenched in red ink. The UK chancellor has already spent about £280bn on helping the economy through the Covid-19 pandemic and the bill will keep rising next week; Britain is not scheduled to fully reopen until June 21.
Sunak — like finance ministers around the world — is throwing money at fighting coronavirus, scrapping fiscal rules and seizing at the lifeline of historically low interest rates. Like Janet Yellen, US Treasury secretary, Boris Johnson’s government is “acting big” in the crisis.
But in an era when economic orthodoxy has been put on hold — governments from the left and right alike are spending on a massive level to avert catastrophe — Sunak will use his Budget to signal that the borrowing binge cannot last forever. Fiscal discipline is about to become, yet again, a defining battle in British politics.