Britain Extends Wage Supports but Looks Toward the Pandemic’s End

Britain Extends Wage Supports but Looks Toward the Pandemic’s End

Britain Extends Wage Supports but Looks Toward the Pandemic’s End

Britain Extends Wage Supports but Looks Toward the Pandemic’s End

The Treasury will also extract additional tax revenue by freezing personal income tax allowances from 2022, a measure that will push more people into higher tax brackets.

The moves were supported by the Resolution Foundation, a British think tank focused on living standards. It said the tax increases were “sensible both in terms of the timing, with revenues raised once the recovery has been secured, and who pays them — high-income households and profitable firms.” But given the two-year delay, the group questioned whether they would actually take effect.

At the same time, Mr. Sunak announced a “super deduction” for business investment. For two years, companies can reduce their tax bill by 130 percent of the amount spent on investment. The move is expected to substantially increase business investment in Britain, which has been sluggish since the 2016 Brexit referendum. It will raise business investment 10 percent in the fiscal year that starts in April 2022, the Office for Budget Responsibility said on Wednesday, but most of the increase will come from bringing forward investment from future years.

Britain’s economy will still face a number of short- and long-term challenges. The Office for Budget Responsibility forecast that the unemployment rate, currently 5 percent, will peak at 6.5 percent this year (lower than previous forecasts) when the furlough program ends. So far, job losses have disproportionately hit young people.

Mr. Sunak said he also wanted this budget to lay “the foundations of our future economy.” And some of the measures have been designed to meet the government’s commitment to “level up” the economy to reduce regional inequality and revitalize the post-Brexit economy. Since Britain left the European Union’s single market and customs union in January, British businesses from fishing to retail have been disrupted by red tape, trade delays and unexpected new costs.

The plans include a second office for the Treasury department in Darlington, in northeast England, and a national infrastructure bank to be set up in Leeds, also in the north, to finance projects to help the government meet its goal of making Britain a net-zero carbon emitter by 2050.

Eight new so-called freeports in England, which are economic zones with lower taxes and other business incentives, would be created. And the Treasury would set aside a pot of money for communities to buy local assets — like pubs and theaters — that might be in danger of closing but are deemed critical to the area.


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