While most governments are focussed squarely on maintaining or increasing fiscal support for their economies, in today’s Budget the Chancellor, Rishi Sunak, adopted a different two-staged plan for the UK – spend big for the next two years and tax big for the following three. With the bulk of the tax hikes not kicking in until the economy will be much stronger in 2023/24, this shouldn’t derail the economic recovery. In fact, if our forecast that the recovery will be faster and fuller than the OBR expects is right, the Chancellor may be in a position to cancel or reverse some of the tax hikes before the 2024 general election.
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