The 'Boris Budget': Rishi Sunak unveils £150bn splurge on public services sparking claims he has bowed to free-spending PM - with huge Universal Credit giveaway, help for business, booze duty cut... and a vague vow taxes will go down
Rishi Sunak today claimed the Tories are the 'real party of public services' after Covid - as he used higher growth forecasts to splurge on 'Levelling Up' and slashing business taxes.
Unveiling a crucial Budget modelled on the PM's free-spending instincts, the Chancellor said he was choosing to 'invest' rather than 'retrench' after the pandemic hammered the country.
Departmental spending will go up by £150billion over this parliament - an average of 3.8 per cent a year in real terms, the fastest rate this century.
Per-pupil spending in schools will be back at 2010 levels by 2024-25, according to the Chancellor.
Meanwhile, in a boon for pubs and high street retailers Mr Sunak said their business rates are being slashed by 50 per cent this year - worth £1.7billion. There are also reforms that in total will benefit them to the tune of £7billion.
Fuel duty is being frozen to avoid heaping pressure on drivers amid soaring prices, and alcohol taxes are being radically simplified. A special lower duty rate will apply to draught drinks.
And in one of the most eye-catching moves, Mr Sunak said universal credit is being made far more generous to give families another £2billion. The taper rate - how much claimants lose for every hour they work over the allowance - is being slashed from 63p in the pound to just 55p.
The minimum wage is also being hiked to £9.50 next year, and the public sector pay freeze is being axed.
The outlay is being largely offset by tax rises, including the huge national insurance increase for social care and the NHS and using a 'double lock' rather than the 'triple lock' for state pensions this year.
It means that overall the Budget only leaves the government £7.7billion a year worse off, while debt will still be significantly lower than feared, according to Budget documents.
Experts said Boris Johnson had clearly emerged victorious after tensions with Mr Sunak over whether the government should splash out more.
The Resolution Foundation said Mr Sunak had received a £141billion windfall in the OBR forecasts from reduced borrowing over the coming years, but spent half of that in a 'Boris Budget'.
Mr Sunak pointed out the UK is recovering more quickly than most competitor nations.
'Let there be no doubt our plan is working,' he said.
But he admitted that the OBR expects inflation to average 4 per cent over the next year - twice the Bank of England's target. A worst-case scenario says that interest rates might need to go to 3.5 per cent to rein in 5.4 per cent inflation.
The supply chain chaos will last 'months' even though much of the price pressure should disappear eventually, he said.
The OBR has upgraded growth for this year from the 4 per cent it suggested in March to 6.5 per cent - less than some had hoped but still enough to return to pre-Covid levels of activity.
Next year GDP is expected to be 6 per cent, lower than the 7.3 per cent at the last set of figures.
Critically the 'scarring' - long-term damage to the economy - is now only thought to be 2 per cent rather than 3 per cent.
The watchdog also now forecasts that unemployment will peak at 5.2 per cent, a fraction of what had been anticipated at the height of the crisis.
'Today's Budget does not draw a line under Covid. We have challenging months ahead,' Mr Sunak said.
'But today's Budget does begin the work of preparing a new economy post-Covid.'
Mr Sunak had a bit more money to deploy due to the strong bounceback from the pandemic.
In a move that will not please many Tories, Mr Sunak said the commitment to spend 0.7 per cent of national income on foreign aid will be restored from 2024-25.
The ferocity of the global resurgence has sparked materials and labour shortages, causing inflation to surge and posing other serious headaches for the government.
In his speech, Mr Sunak said the Budget would usher in a 'new economy' after the pandemic as he confirmed billions of pounds for the NHS and wage rises for millions of workers.
'Today's Budget increases total departmental spending over this Parliament by £150billion,' he said.
'That's the largest increase this century, with spending growing by 3.8 per cent a year in real terms.
'As a result of this Spending Review, and contrary to speculation there will be a real terms rise in overall spending for every single department.
'And public sector net investment as a share of GDP will be at the highest sustained level for nearly half a century. If anyone still doubts it, today's Budget confirms the Conservatives are the real party of public services.'
Local government will get £4.8 billion in grant funding over three years, the largest increase for more than a decade, he said.
He also promised that the devolved administrations will be given the 'largest block grants' since 1998, with an increase to Scottish Government funding in each year by an average of £4.6billion, £2.5billion for the Welsh Government, and £1.6billion for the Northern Ireland Executive.
Research and development spending will be be £20billion a year by the end of the parliament, a 50 per cent increase and a greater proportion of GDP than in Germany, France and the US.
Underlining the scale of the tax raid, the OBR watchdog pointed out that in just two financial packages this year the Chancellor has brought in more revenue than after Black Wednesday in 1993.
'Taking his March and October Budgets together, the Chancellor has raised taxes by more this year than in any single year since Norman Lamont and Ken Clarke's two 1993 Budgets in the aftermath of Black Wednesday,' the independent body's report said.
Labour's response risked descending into shambles after it emerged at the last moment that Keir Starmer has tested positive for coronavirus. Shadow chancellor Rachel Reeves answered the statement for the Opposition instead, while shadow business secretary Ed Miliband filled in at PMQs.
Rishi Sunak and Boris Johnson visited a brewery in Bermondsey, London, this afternoon after his Budget speech
The Chancellor and the PM toasted his announcements - even though some Tories were alarmed at the tax and spending
Mr Sunak today vowed a Budget to foster a 'stronger economy' after Covid - having been handed firepower with much higher growth forecasts
Unveiling his crucial financial package, Mr Sunak insisted the government's Levelling Up agenda is a 'golden thread' in his approach. Senior Tories including Boris Johnson had donned masks for the statement - although Jacob Rees-Mogg was still bare-faced 
Public sector debt does not rise as high as previously under the latest OBR projections
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n a stark assessment alongside the Budget, the Office for Budget Responsibility (OBR) said its central forecast is for headline CPI to peak at 4.4 per cent in the second quarter of year
In both scenarios, CPI inflation could go up to 5.4 per cent, with the OBR saying that the Bank of England base rate would need to soar to 3.5 per cent from the low of 0.1 per cent now
The headline CPI rate of inflation was 3.1 per cent in September, down slightly from the 3.2 per cent recorded in August. However, the Bank of England expects it to top 4 per cent in the coming months
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 financial statement in March.
The change in the OBR watchdog's prediction for growth and the 'scarring' from the pandemic has given Mr Sunak more leeway to pump money into public services as he sets out spending plans for Whitehall departments for three years.
However, the biggest-ticket item - the £12billion a year NHS and social care boost funded by an eye-watering national insurance hike - had already been revealed last month.
Torsten Bell, chief executive of the Resolution Foundation, said: 'The Chancellor has today delivered a ''Boris budget'' by spending half of the large £141bn borrowing windfall that was handed down by the Office for Budget Responsibility.
'He's used that windfall to spend significantly more, especially in the next few years. The lasting effect of that extra spending is to allow him to partially reverse some of his own decisions by reinstating cuts to aid spending, and increasing Universal Credit generosity for working claimants.
'But the forecasts contained far less good news for household finances. Higher inflation will all but end income growth next year. The Chancellor's welcome reduction in the Universal Credit taper will soften, rather than tackle, the cost of living crisis facing millions of families across the UK today.
'The welcome £3bn boost to Universal Credit today will have offset some of the losses from the £6bn cut that took effect earlier this month. But while some higher-earning couples on UC are likely to be better off, the poorest families in the UK will still be far worse off over the coming months.
'The big picture is that the pandemic has made our economy smaller than we expected it to be. But the government is spending more because they have favoured a higher tax form of conservatism than many – including many Tory MPs – expected.'
In a further positive bit of news for Mr Sunak, there are claims today that the chances of 'Plan B' Covid restrictions have fallen dramatically after the surge in cases levelled off.
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 also set out new fiscal rules, which include a commitment to stop borrowing to fund day-to-day spending within three years.
He is also requiring 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.'
Ministers have been under huge pressure to reverse the decision to end the temporary £20-a-week uplift to Universal Credit, which was introduced during the pandemic.
The government ruled out bowing to those demands and instead made the benefit more generous.
Public sector net borrowing will be lower than had been expected in March, thanks to the improved overall economic picture
The tax burden is going to its highest level since the Second World War, despite Rishi Sunak's promise that he wants to cut it
Mr Sunak defended his previous decisions to increase taxes for public spending, saying: 'I don't like it but I can't apologise for it.'
In a passage seemingly designed to appease restive MPs about his Conservative instincts, Mr Sunak said: 'We have a choice. Do we want to live in a country where the response to every question is, 'What is the government going to do about it? Where every time prices rise, every time a company gets in trouble, every time some new challenge emerges, the answer is always the taxpayer must pay.
'Or do we choose to recognise that government has limits, government should have limits.
'If this seems if this seems a controversial statement to make, then I'm all the more glad for saying it because that means it needed saying.'
Mr Sunak went on: 'My goal is to reduce taxes. By the end of this Parliament, I want taxes to be going down not up. I want this to be a society that rewards energy, ingenuity and inventiveness. A society that rewards work.'
The director of the respected Institute for Fiscal Studies (IFS), Paul Johnson, tweeted: '(The) Chancellor seems to be claiming tax and spending rising to record levels because of the pandemic. Not true. These are largely tax and spending decisions unrelated to pandemic.'
Mr Johnson also contested the Chancellor's claim the minimum wage increase is worth £1,000 to a full-time worker, stating this is worth £700 after tax and national insurance and 'less than £300 to anyone on Universal Credit (UC)'.
Mr Johnson said it was the 12th year in a row fuel duty has been frozen, adding this was a 'big tax loss' for the Treasury and 'hardly consistent with climate change objectives'.
He added: 'Big cut to Universal Credit taper. And increase in work allowance. Targeted at working claimants. Out of work UC claimants get nothing.
'Trade-offs as ever. Improves work incentives for current recipients but will drag more into the system.'
Mr Johnson told BBC News that projected 'stagnant' standard of living could be a 'political driver' over the next five years.
'The expectation for household income increases over the next five years will be pretty stagnant – growing at less than one per cent a year for the next five years, and that's partly because of inflation, that's partly because of the big tax rises that we've seen imposed, that's partly because growth is so poor and that's really very disappointing because, remember, we've had a decade of pretty stagnant living standards, and I think in the end that's going to be the big political driver of a lot that goes on, as it was over the last decade.
'Poor living standards had a big political effect and it looks like those almost non-existent increases in living standards over the next half a decade, that's a big blow to all households and families of course, but it can also have a big impact on politics.'
In March, the OBR warned that by 2025-6 the economy will still be 3 per cent smaller than it would have been if the pandemic never happened.
Unemployment was expected to peak at 6.5 per cent, but that was down from the bloodcurdling 11.9 per cent predicted in July last year.
National debt was set to hit an eye-watering £2.747trillion in 2023-4, equivalent to a peak of 109.7 per cent of GDP.
By 2026-7 the central forecast was that it would be over £2.8trillion and still bigger than the economy's annual output.
The OBR estimated that by the end of its forecast period the government's deficit will be almost eradicated, at £900million, finally stopping debt rising.
Is your mortgage payment about to soar by a third? OBR warns interest rates could soar to 3.5 per cent as inflation may head to a three-decade high of 5.4 PER CENT next year - adding £300 a month to a £150,000 25-year mortgage
The Government's financial watchdog today warned a 'wage spiral' or energy shock could drive inflation to a three-decade high of 5.4 per cent next year and force the Bank of England to take drastic action on interest rates in a move which would have major repercussions for mortgage holders.
In a stark assessment alongside the Budget, the Office for Budget Responsibility (OBR) said its central forecast is for headline CPI to peak at 4.4 per cent in the second quarter of the year, far above the current 3.1 per cent, and more than double the Bank's 2 per cent target.
But it warned that data since the document was prepared suggests that a figure of 5 per cent could be more realistic.
Such a high level of inflation would likely trigger the Bank to hike interest rates in a move which could see monthly mortgage payments increase by as much as a third.
The OBR put forward two scenarios where the situation could get dramatically worse - with either a 'mild wage spiral' developing or continuing pressure on energy and product prices.
In both, CPI inflation could go up to 5.4 per cent, with the OBR saying that the Bank of England base rate would need to soar to 3.5 per cent from the low of 0.1 per cent now.
Such a shift would cause huge pain for homeowners who would face surging mortgage costs.
A family with a £150,000 25-year mortgage could see monthly repayments increase from £759 to £1,060 - if the current gap between the Standard Variable Rate and the Bank's interest rate was maintained.
Rising interest rates would also result in 'fiscal consequences' for the Government because the cost of servicing the £2.2trillion public debt mountain would rise.
Unveiling his Budget today, Mr Sunak said he was renewing the Bank of England's core duty to keep inflation under control.
'I have written to the Governor of the Bank of England today to reaffirm their remit to achieve low and stable inflation,' he said.
Public sector debt does not rise as high as previously under the latest OBR projections
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n a stark assessment alongside the Budget, the Office for Budget Responsibility (OBR) said its central forecast is for headline CPI to peak at 4.4 per cent in the second quarter of year
In both scenarios, CPI inflation could go up to 5.4 per cent, with the OBR saying that the Bank of England base rate would need to soar to 3.5 per cent from the low of 0.1 per cent now
The headline CPI rate of inflation was 3.1 per cent in September, down slightly from the 3.2 per cent recorded in August. However, the Bank of England expects it to top 4 per cent in the coming months
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 financial statement in March.
The change in the OBR watchdog's prediction for growth and the 'scarring' from the pandemic has given Mr Sunak more leeway to pump money into public services as he sets out spending plans for Whitehall departments for three years.
However, the biggest-ticket item - the £12billion a year NHS and social care boost funded by an eye-watering national insurance hike - had already been revealed last month.
Torsten Bell, chief executive of the Resolution Foundation, said: 'The Chancellor has today delivered a ''Boris budget'' by spending half of the large £141bn borrowing windfall that was handed down by the Office for Budget Responsibility.
'He's used that windfall to spend significantly more, especially in the next few years. The lasting effect of that extra spending is to allow him to partially reverse some of his own decisions by reinstating cuts to aid spending, and increasing Universal Credit generosity for working claimants.
'But the forecasts contained far less good news for household finances. Higher inflation will all but end income growth next year. The Chancellor's welcome reduction in the Universal Credit taper will soften, rather than tackle, the cost of living crisis facing millions of families across the UK today.
'The welcome £3bn boost to Universal Credit today will have offset some of the losses from the £6bn cut that took effect earlier this month. But while some higher-earning couples on UC are likely to be better off, the poorest families in the UK will still be far worse off over the coming months.
'The big picture is that the pandemic has made our economy smaller than we expected it to be. But the government is spending more because they have favoured a higher tax form of conservatism than many – including many Tory MPs – expected.'
In a further positive bit of news for Mr Sunak, there are claims today that the chances of 'Plan B' Covid restrictions have fallen dramatically after the surge in cases levelled off.
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 also set out new fiscal rules, which include a commitment to stop borrowing to fund day-to-day spending within three years.
He is also requiring 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.'
Ministers have been under huge pressure to reverse the decision to end the temporary £20-a-week uplift to Universal Credit, which was introduced during the pandemic.
The government ruled out bowing to those demands and instead made the benefit more generous.
Public sector net borrowing will be lower than had been expected in March, thanks to the improved overall economic picture
The tax burden is going to its highest level since the Second World War, despite Rishi Sunak's promise that he wants to cut it
Mr Sunak defended his previous decisions to increase taxes for public spending, saying: 'I don't like it but I can't apologise for it.'
In a passage seemingly designed to appease restive MPs about his Conservative instincts, Mr Sunak said: 'We have a choice. Do we want to live in a country where the response to every question is, 'What is the government going to do about it? Where every time prices rise, every time a company gets in trouble, every time some new challenge emerges, the answer is always the taxpayer must pay.
'Or do we choose to recognise that government has limits, government should have limits.
'If this seems if this seems a controversial statement to make, then I'm all the more glad for saying it because that means it needed saying.'
Mr Sunak went on: 'My goal is to reduce taxes. By the end of this Parliament, I want taxes to be going down not up. I want this to be a society that rewards energy, ingenuity and inventiveness. A society that rewards work.'
The director of the respected Institute for Fiscal Studies (IFS), Paul Johnson, tweeted: '(The) Chancellor seems to be claiming tax and spending rising to record levels because of the pandemic. Not true. These are largely tax and spending decisions unrelated to pandemic.'
Mr Johnson also contested the Chancellor's claim the minimum wage increase is worth £1,000 to a full-time worker, stating this is worth £700 after tax and national insurance and 'less than £300 to anyone on Universal Credit (UC)'.
Mr Johnson said it was the 12th year in a row fuel duty has been frozen, adding this was a 'big tax loss' for the Treasury and 'hardly consistent with climate change objectives'.
He added: 'Big cut to Universal Credit taper. And increase in work allowance. Targeted at working claimants. Out of work UC claimants get nothing.
'Trade-offs as ever. Improves work incentives for current recipients but will drag more into the system.'
Mr Johnson told BBC News that projected 'stagnant' standard of living could be a 'political driver' over the next five years.
'The expectation for household income increases over the next five years will be pretty stagnant – growing at less than one per cent a year for the next five years, and that's partly because of inflation, that's partly because of the big tax rises that we've seen imposed, that's partly because growth is so poor and that's really very disappointing because, remember, we've had a decade of pretty stagnant living standards, and I think in the end that's going to be the big political driver of a lot that goes on, as it was over the last decade.
'Poor living standards had a big political effect and it looks like those almost non-existent increases in living standards over the next half a decade, that's a big blow to all households and families of course, but it can also have a big impact on politics.'
In March, the OBR warned that by 2025-6 the economy will still be 3 per cent smaller than it would have been if the pandemic never happened.
Unemployment was expected to peak at 6.5 per cent, but that was down from the bloodcurdling 11.9 per cent predicted in July last year.
National debt was set to hit an eye-watering £2.747trillion in 2023-4, equivalent to a peak of 109.7 per cent of GDP.
By 2026-7 the central forecast was that it would be over £2.8trillion and still bigger than the economy's annual output.
The OBR estimated that by the end of its forecast period the government's deficit will be almost eradicated, at £900million, finally stopping debt rising.
Is your mortgage payment about to soar by a third? OBR warns interest rates could soar to 3.5 per cent as inflation may head to a three-decade high of 5.4 PER CENT next year - adding £300 a month to a £150,000 25-year mortgage
The Government's financial watchdog today warned a 'wage spiral' or energy shock could drive inflation to a three-decade high of 5.4 per cent next year and force the Bank of England to take drastic action on interest rates in a move which would have major repercussions for mortgage holders.
In a stark assessment alongside the Budget, the Office for Budget Responsibility (OBR) said its central forecast is for headline CPI to peak at 4.4 per cent in the second quarter of the year, far above the current 3.1 per cent, and more than double the Bank's 2 per cent target.
But it warned that data since the document was prepared suggests that a figure of 5 per cent could be more realistic.
Such a high level of inflation would likely trigger the Bank to hike interest rates in a move which could see monthly mortgage payments increase by as much as a third.
The OBR put forward two scenarios where the situation could get dramatically worse - with either a 'mild wage spiral' developing or continuing pressure on energy and product prices.
In both, CPI inflation could go up to 5.4 per cent, with the OBR saying that the Bank of England base rate would need to soar to 3.5 per cent from the low of 0.1 per cent now.
Such a shift would cause huge pain for homeowners who would face surging mortgage costs.
A family with a £150,000 25-year mortgage could see monthly repayments increase from £759 to £1,060 - if the current gap between the Standard Variable Rate and the Bank's interest rate was maintained.
Rising interest rates would also result in 'fiscal consequences' for the Government because the cost of servicing the £2.2trillion public debt mountain would rise.
Unveiling his Budget today, Mr Sunak said he was renewing the Bank of England's core duty to keep inflation under control.
'I have written to the Governor of the Bank of England today to reaffirm their remit to achieve low and stable inflation,' he said.
In both scenarios, CPI inflation could go up to 5.4 per cent, with the OBR saying that the Bank of England base rate would need to soar to 3.5 per cent from the low of 0.1 per cent now
n a stark assessment alongside the Budget, the Office for Budget Responsibility (OBR) said its central forecast is for headline CPI to peak at 4.4 per cent in the second quarter of year
Public sector net borrowing will be lower than had been expected in March, thanks to the improved overall economic pictureThe OBR said: 'In both scenarios, a further sharp and persistent increase in costs means inflation peaks at 5.4 per cent (1 percentage point above our central forecast and the highest rate in three decades) and then falls back more slowly than in our central forecast.
'Based on a simple monetary policy rule, Bank Rate in our scenario reaches 3.5 per cent (its highest since November 2008), thereby suppressing demand and moderating inflationary pressures, but even so it still takes a year longer for inflation to return to the target than in our central forecast.
'At its peak, the impact of this vigorous monetary tightening prevents a further 2 to 3 percentage point rise in inflation, and without it the price level would be some 6 to 8 per cent higher at the scenario horizon.'
The OBR's central forecast upgraded growth for this year from the 4 per cent it suggested in March to 6.5 per cent - less than some had hoped but still enough to return to pre-Covid levels of activity.
Next year GDP is expected to be 6 per cent, lower than the 7.3 per cent at the last set of figures.
Critically the 'scarring' - long-term damage to the economy - is now only thought to be 2 per cent rather than 3 per cent.
The watchdog also now forecasts that unemployment will peak at 5.2 per cent, a fraction of what had been anticipated at the height of the crisis.
'Today's Budget does not draw a line under Covid. We have challenging months ahead,' Mr Sunak said.
'But today's Budget does begin the work of preparing a new economy post-Covid.'
Jonathan Gillham, chief economist at PwC, said: 'This rapid recovery must be viewed through the lens of inflation which is largely being 'imported' from overseas.
'This is because some countries have not opened up as rapidly as the UK, are still in lockdowns and have less access to vaccines, so there are supply chain shortages.
'Also, energy prices have risen sharply, again, as key production and extraction facilities are not at full capacity.
'There is increased competition for scarce resources. Inflation forecasts for 2022 have more than doubled since the last forecast peaking at 4.4 per cent in the second quarter of 2022.'
The bounceback and enormous furlough support is also helping the UK jobs market weather the pandemic, with the OBR now expecting the unemployment rate to peak at 5.2 per cent, down from 5.6 per cent previously and the 12 per cent initially feared.
Mr Sunak outlined a raft of new fiscal rules, called the Charter for Budget Responsibility, which will look to ensure day-to-day spending is no longer funded via borrowing and for underlying debt - currently around 100 per cent of GDP - to fall.
The OBR said the improved fiscal outlook means the Chancellor is on track to meet his new goal for underlying debt to fall by 2024-25.
This is thanks to sharply lower borrowing expected in each year under the forecasts, with the OBR now saying it believes borrowing will drop to £183 billion or 7.9 per cent of GDP in 2021-22, down from the 10.3 per cent or £234 billion previously predicted and almost half the record £320 billion amassed in 2020-21 after a mammoth £315 billion of emergency pandemic support.
Borrowing will then drop to £83 billion or 3.3 per cent of GDP next year, then decline gradually to 2.4 per cent, 1.7 per cent and 1.7 per cent in the following years before reaching £44 billion or 1.5 per cent in 2026-27.
This would leave borrowing at the forecast horizon 1 per cent of GDP lower than it was before the pandemic struck, and the lowest level for 25 years, according to the OBR.
Public sector debt does not rise as high under the latest OBR projections
The tax burden is going to its highest level since the Second World War, despite Rishi Sunak's promise that he wants to cut it
Government spending is going to continue higher than it was before the pandemic as a proportion of GDP
The scenarios with a huge spike in inflation would have knock-on effects for the wider economy, the OBR said
Teetotal Chancellor uses post-Brexit freedoms to slash cost of rose, fruit cider and prosecco but warns wine drinkers will pay more for their 12% volume red
Rishi Sunak today unveiled a major overhaul of the UK's alcohol taxes as he cut the price of a pint of draught beer by three pence - but increased the levy on red wine.
The Chancellor used his Budget to set out a new Draught Relief policy which will see beer and cider duty reduced by five per cent.
He said that amounted to the biggest cut on the tax on beer in 50 years and the 'biggest cut to cider duty since 1923'.
He also announced a planned increase to the duty on spirits, wine, cider and beer will be cancelled while the 'irrational' 28 per cent duty on premium sparkling wines like prosecco and fruit ciders will be cut.
However, the Chancellor's plans to simplify the alcohol duty system - which he said was made possible by Brexit - will see some drinks become more expensive, with red wine drinkers among those hit.
Mr Sunak said that under his new system which be rolled out in February 2023, the stronger the drink, the higher the rate of tax will be.
That will also mean less-strong drinks like Rose wine and liqueurs which are currently 'over taxed' will become cheaper.
The Chancellor said the Draught Relief amounts to the biggest cut on the tax on beer in 50 years and the 'biggest cut to cider duty since 1923'
Treasury estimates suggest the changes to beer duty will shave three pence in tax off the cost of a pint of Stella Artois and Guinness
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