UK chancellor Rishi Sunak is vowing to hike investment to levels not seen since the 1950s as the government unveils its 2020 Budget on Wednesday.
Sunak will take to the floor of the House of Commons at around 12.30pm to announce the government’s tax, spending and borrowing plans.
The Conservatives’ December manifesto had pledged a £100bn ($129bn) spending blitz on infrastructure, in a bid to “level up” worse-off areas of the UK.
Now the chancellor is promising to spend “historic amounts” on infrastructure, innovation and other long-term investment. He is reported to be planning to hike spending to £600bn over the five-year parliament.
It will lift net investment to three times higher than the average over the past 40 years, and to its highest in real terms since 1955, according to the Treasury.
Some had expected the chancellor to shelve part of the government’s investment plans, focusing more narrowly on the UK’s immediate response to the coronavirus outbreak. Nomura analysts predicted Sunak would reserve some infrastructure “firepower” for another budget later this year.
The chancellor is expected to delay publication of an official infrastructure strategy for several months. But the scale of the investment announcement suggests the government is still keen to win over new Conservative voters in its Budget, as well as reassure over the outbreak.
Several organisations have downgraded their forecasts for the already sluggish UK economy as covid-19 and containment measures hit demand, supply chains and confidence.
The outbreak prompted the Bank of England to slash interest rates back to a historic low of 0.25% on Wednesday morning. The Budget is also expected to include a range of measures to contain the economic fallout of the virus, as well as bolster NHS resources to deal with rising workloads.
Extra spending and support is predicted for firms left facing cashflow or debt repayment problems and insecure workers forced to self-isolate without sick pay.
But Labour’s shadow chancellor John McDonnell claimed Sunak was “asking us to congratulate him” for hiking spending despite a decade of widespread cuts to budgets across government.
Bob Hide, managing director of consultancy Equib, which specialises in construction risk management, welcomed the infrastructure boost but said he was concerned about the delayed infrastructure strategy. "We can’t be sure how or where this money will be spent and whether it will deliver long-term benefits."