Treasury Secretary Rishi Sunak also announced the increase in corporate tax from 19% to 25% for companies with profits above 55,000 euros per year.
The British Government has decided to extend its employment protection program until September, with a commitment to pay up to 80% of wages. Treasury Secretary Rishi Sunak has also announced the creation of an Infrastructure Bank, based in Leeds, as part of the recovery plan after the pandemic, which in 2020 entailed a 9.9% GDP contraction. The growth forecast for this year is 4%.
Sunak’s third big announcement was the increase in corporate tax from 19% to 25% for companies with profits of more than 55,000 euros per year. “This will mean a tax increase for only 10% of the companies,” specified the Secretary of the Treasury, who reiterated that there will be no substantial changes in either VAT or income tax returns.
The plan to stimulate and protect the economy (estimated at more than 320,000 million euros) has so far managed to cushion the impact of the three national confinements. Unemployment in the United Kingdom is currently around 5%, the highest level in the last four years, but well below that in most European countries.
“The country continues to face some moments of crisis,” warned Sunak, at the time of presenting the new budget and announcing the destination of 34,000 million euros extra to compensate the population most affected by the restrictions against the Coronavirus, which remain temporarily in force at least until June 21.
“As the economy reopens between now and summer, it is only fair that we focus on supporting those who have been hardest hit,” Sunak told Parliament. “People whose incomes have fallen 30% or more will continue to receive an 80% subsidy. Those who have lost less money will need less support and will receive 30%.”
Sunak, the most popular Minister of Government Johnson (and the richest Secretary of the Treasury in history, married to the daughter of the Indian billionaire Narayana Murthy), warned however that the Government “needs to adjust its finances” after the effort in public spending.
He also anticipated his intention to tax companies that carried out their operations mainly ‘online’, with compensation measures for street-level businesses that have seen their activity interrupted for much of the last year (the shops ” non-essentials “remain closed in the UK until 12 April).
Meanwhile, the British Government will continue to cut VAT for the services sector and for tourism, which will be the last to recover activity in mid-June, according to the gradual de-escalation in four phases announced by Boris Johnson. The cultural sector, doubly affected by Brexit, will be compensated with a fund of 350 million euros, the same money that sports clubs affected by the restrictions in recent months will receive.
One of the great novelties of the budget has been the announcement of the Infrastructure Bank with which it has been speculating for months. “We are going to make the investments of a whole generation in infrastructures”, anticipated Sunak, with the high-speed rail (HS2) as project-flag.
The headquarters of the future bank, which will start operating this spring, will be located in Leeds, to reinforce the Johnson Government’s commitment to the economic recovery of the north of England. The new bank will prioritize “supporting the government’s ambitions to achieve zero emissions by 2050,” according to the Secretary of the Treasury.
“We need a new economic geography,” said Sunak, who announced the creation of ten “free ports” throughout the country to speed up the transport of goods. “This is going to be possible precisely thanks to our departure from the EU (…) because of the departure from the EU.” In the future, I imagine the old industrial nuclei used as centers for carbon capture, for the manufacture of wind turbines or for the manufacture of vaccines “.