It’s boom boom Rishi: Chancellor will tell the country we are bouncing back in budget speech

Rishi Sunak will today declare Britain is ready to enter a ‘new age of optimism’ and a ‘post-Covid’ economy as he is handed a Budget day growth boost.

Official forecasts, set to be updated today, are expected to show the economy is rebounding faster than predicted – allowing the Chancellor to splash more cash.

But the predictions will come with a sting in the tail as the threat of rising prices and worker shortages could put pressure on household finances.

Mr Sunak will hail his Budget as ushering in a ‘new economy’ after the pandemic as he confirms billions of pounds for the NHS and wage rises for millions of workers.

However, he will also stress the need for fiscal responsibility as he reveals a plan for bringing borrowing under control amid concerns about inflation and the threat of interest rate rises.

During his speech, Mr Sunak is expected to say: ‘Today’s Budget begins the work of preparing for a new economy post-Covid. An economy of higher wages, higher skills and rising productivity of strong public services, vibrant communities and safer streets.

‘An economy fit for a new age of optimism. That is the stronger economy of the future.’

The Office for Budget Responsibility will hand him upbeat forecasts, despite the looming threat of inflation.

The easing of lockdown restrictions and the vaccine rollout mean the economy is in better shape than was expected at the time of the last Budget in March.

Growth forecasts for this year will be revised from 4 per cent to as high as 7.5 per cent – giving Mr Sunak more leeway to pump money into public services as he sets out spending plans for Whitehall departments for three years.

He will also benefit from improved borrowing numbers. It came as:

÷ Ministers unveiled a new funding model to encourage more British investment in nuclear power stations – squeezing China out but risking higher home energy bills.

÷ Commons Speaker Sir Lindsay Hoyle complained Mr Sunak was treating MPs in a ‘discourteous manner’ by pre-briefing some of his Budget announcements.

÷ Union bosses demanded all public-sector workers should be given inflation-busting pay rises.

÷ It was warned that a new inflation forecast could reduce household incomes by £1,000 next year in real terms.

÷ The Budget is set to include a freeze on fuel duty – but not a cut on VAT on energy bills.

÷ MPs have been urged to wear masks during the Chancellor’s Budget speech by a World Health Organisation Covid expert.

In the Budget today, Mr Sunak will confirm a rise of the minimum wage to £9.50 from April and the end of the pay freeze he imposed on public-sector workers.

He will also unveil a further £5.9billion in capital funding to help the NHS clear the backlog created by Covid-19.

The Treasury has pledged green investment and policies to take advantage of post-Brexit freedoms and has touted nearly £7billion of new funding for local transport.

Mr Sunak will also set out new fiscal rules, which are expected to include a commitment to stop borrowing to fund day-to-day spending within three years.

It is thought he will also require government debt, running at about 100 per cent of gross domestic product, to start falling by 2025.

Office for National Statistics figures showed last week government borrowing was far lower than forecast in the first half of the fiscal year. The budget deficit was £108.1billion between April and September, almost 30 per cent below predictions. However, Mr Sunak will strike a note of caution about how servicing the debt could become much dearer if prices rise.

In March, he pointed out that a 1 per cent rise in interest rates and inflation would cost us over £25billion, adding: ‘Over the medium term, we cannot allow debt to keep rising, and, given how high our debt now is, we need to pay close attention to affordability.’

Former Treasury minister David Gauke told Radio 4’s the World At One yesterday: ‘In the short term there is going to be some good news for the Chancellor as the economy has grown faster than projected.’ But he added: ‘There are still some real challenges.’

Shadow Chancellor Rachel Reeves urged Mr Sunak to ‘take the pressure off working people’.

She added: ‘Labour would ease the burden on households, cutting VAT on domestic energy bills immediately for six months, and we would not raise taxes on working people and British businesses while online giants get away without paying their fair share.’  

No time for flip-flopping, Chancellor

By Harriet Line Chief Political Correspondent 

Today is likely to be anything but comfortable for Rishi Sunak, so the Chancellor was doing his best to relax yesterday – in a trendy pair of £95 ‘sliders’.

In glossy photos released by the Treasury, Mr Sunak could be seen putting the finishing touches to his Budget while in socks and sporting the American-style shoes, made by fashion label Palm Angels. Sliders are similar to flip flops but without a central toe post, and popular with teenagers.

Another photo showed a can of Sprite and a Twix next to his red box – after the teetotal Chancellor said he would eat the sugary snacks as his ‘pre-game routine’ for the Budget.

A third image showed him reading on the sofa with his red fox labrador puppy Nova.