On Thursday, the country will get its first comprehensive sight of the complex financial burden it faces from fighting Covid-19, coping with the surge in energy prices that has followed Russia’s invasion of Ukraine, and from the economic impact of leaving the European Union.
Jeremy Hunt, the new chancellor, has given a series of interviews confirming that everyone will be paying more tax under the plans he will set out in the autumn statement – a key part of the budgetary process. He has also confirmed that support for energy bills will be targeted towards the most vulnerable when the present scheme ends in April and that he expects the UK economy will go into a recession next year. That recession, he hopes, will be “as short and shallow as possible”.
All this is no surprise. There is an underlying gap in the government’s finances, estimated to be of the order of £50bn a year, that needs to be closed if on reasonable assumptions the size of the national debt is not to rise as a proportion of GDP. Given that there will be further shocks in the future, the prudent thing to do is to take steps now that set the debt on a downward path.
