UK turns austerity pages for first post-Brexit budget

Chancellor of the chessboard Rishi Sunak presents the 2020 budget in the House of Commons in London on Wednesday March 11.
Chancellor of the chessboard Rishi Sunak presents the 2020 budget in the House of Commons in London on Wednesday March 11. STRINGER / AFP

Privately, a British Treasury official sums up the message in a highly technical term: "It's a fuckload of money" ("It's a fucking bundle of money"). The British budget, presented Wednesday, March 11, indeed, puts a lot of money on the table. Compared to what was already planned, the state will spend an additional 175 billion pounds (200 billion euros) over the next five years. For the coming fiscal year, from April 2020 to March 2021, the stimulus package amounts to £ 18 billion, to which was urgently added £ 12 billion to deal with the coronavirus epidemic. In total, this represents 1.5% of gross domestic product (GDP), a level similar to that presented during the 2008 financial crisis.

In the years that followed, while some major projects got under way, money would flow even more, with around 2% of additional GDP injected into the economy. The austerity, begun in 2010 and gradually reduced over the past four years, is well and truly over. The first budget of the post-Brexit era is a return to the good old methods: the Keynesian revival.

Dampening the shock of Brexit

Inevitably, under the circumstances, Rishi Sunak, the all-new Chancellor of the Exchequer, devoted half of his speech to Covid-19. "I know people are worried. But we will do everything to ensure that this country and its people remain healthy and financially secure. " Emergency allowances will be granted to the British who are forced to quarantine themselves, companies will be able to defer certain taxes, will receive special aid, and emergency funds will be released for health services.

Article reserved for our subscribers Read also Coronavirus: An economic recovery in dispersed order

These decisions, concluded at half past midnight the day before the budget, hides a major shift in British economic policy. "It is the biggest budget gift since 1992", analyzes the Office for Budget Responsibility, the independent body charged with carrying out the economic and budgetary forecasts of the government. At the time, John Major had just become prime minister and the Conservatives feared losing the organized elections a few months later. This time, it's about preparing the country for the post-Brexit era. Without saying so, it is also a way of cushioning the possible economic shock caused by the exit from the European Union, especially if there is no agreement with Brussels at the end of the year.


Please enter your comment!
Please enter your name here