Commenting on the Chancellor’s Budget, Melanie Baker, Senior Economist at Royal London Asset Management (RLAM) said:
“Premature fiscal tightening had looked more of a risk in the UK than in the US and euro area, so an extension of Covid-relief for the economy is very welcome. This package of measures lowers near-term risks to the recovery.
“For a mid-sized open economy like the UK, having a plan to get the fiscal finances in order is no bad thing, but it is important to get the timing right. If the economy is not normalising by the middle of the year then worries about premature fiscal tightening may resurface.”
“The Budget was lighter on future tax increases than some perhaps feared, especially near-term, but there are significant new fiscal tightening measures in the second of half of the government projection, largely via the rise in corporation tax and the freezing of the personal tax allowance/higher rate threshold.”
The views expressed are the author’s own and do not constitute investment advice.