Array
(
    [countryCode] => US
    [region] => VA
    [isp] => Amazon Technologies Inc.
    [org] => AWS EC2 (us-east-1)
    [zip] => 20149
    [lat] => 39.043800354004
    [as] => AS14618 Amazon.com, Inc.
    [country] => United States
    [regionName] => Virginia
    [city] => Ashburn
    [lon] => -77.487396240234
    [status] => success
    [query] => 3.236.50.79
    [timezone] => America/New_York
)
        

Support 100 years of independent journalism.

  1. Politics
  2. UK Politics
9 March 2020updated 13 Mar 2020 10:08am

How coronavirus has given Rishi Sunak a new Budget headache

The Chancellor faces a long list of businesses and individuals badly needing government assistance.

By Stephen Bush

Global oil prices have plummeted and the global financial markets are following suit, as worry about Covid-19 makes itself felt on an already fragile world economy. 

Boris Johnson will today decide whether to implement yet further measures to contain and delay the spread of Covid-19 here in the UK. But governments across the world not only have to make epidemiological decisions about what to do next, they also need to make economic decisions about how best to weather the crisis.

As the FT reports, businesses in the hospitality sector are the first in the firing line, thanks to their tight margins and their extreme vulnerability to consumer panic. At least it’s good news for the supermarkets, as people are bulk-buying? Well, yes and no. The thing about non-perishable items is exactly that, they’re non-perishable. Today’s rush is tomorrow’s unusually quiet trading quarter. It’s easier for big businesses to live off their humps than small businesses, but taken together it makes for a grim outlook for practically everybody.

It means that Rishi Sunak exchanges one headache for another. The Chancellor’s original headache was that he had inherited a tricky set of pledges on tax and spending, which, coupled with the government’s pledge to reduce the United Kingdom’s debt-to-GDP ratio, made for a very tight spending round. But those pledges are predicated on the UK economy continuing to grow – take that assumption away and the limits on Sunak’s freedom to manoeuvre similarly fall away. The political challenges of ending the fuel duty freeze, too, just got a lot less challenging. 

But as he examines a long, long list of businesses and individuals badly needing government assistance to help them get through the crisis, Sunak will be forgiven for wishing he was still stuck with his fiscal straitjacket.

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. Quick and essential guide to domestic and global politics from the New Statesman's politics team. The New Statesman’s global affairs newsletter, every Monday and Friday. The best of the New Statesman, delivered to your inbox every weekday morning. The New Statesman’s weekly environment email on the politics, business and culture of the climate and nature crises - in your inbox every Thursday. A handy, three-minute glance at the week ahead in companies, markets, regulation and investment, landing in your inbox every Monday morning. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A newsletter showcasing the finest writing from the ideas section and the NS archive, covering political ideas, philosophy, criticism and intellectual history - sent every Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.

Content from our partners
How do we secure the hybrid office?
How materials innovation can help achieve net zero and level-up the UK
Fantastic mental well-being strategies and where to find them