European markets rise ahead of UK budget

by Jonathan Adams
UK budget

In the UK, Chancellor Rishi Sunak is expected to pledge to do “whatever it takes” to help businesses and people through the Covid crisis

More than a year into the pandemic, the prospect of more government spending continues to support the financial markets.

Stocks in Europe are expected to rally this morning, as City traders prepare for the Budget, and welcome the prospect of President Joe Biden’s $1.9 trillion fiscal stimulus package making it through Congress soon.

In the UK, Chancellor Rishi Sunak is expected to pledge to do “whatever it takes” to help businesses and people through the pandemic, topping up the £280 billion already spent since the pandemic began.

That will include a six-month extension to the UK’s job retention scheme, until the end of September, to protect jobs. It means workers will continue to be guaranteed 80% of their salary for a further three months after the government hopes to have lifted restrictions in June, with the scheme slowly being phased out.

An extra 600,000 people will now be eligible for state financial help as well, through the Self-Employment Income Support Scheme. It will now include those who became self-employed in 2019-20.

A number of other measures have been trailed in recent days, including billions of pounds of funding for the UK’s new infrastructure bank; a new mortgage guarantee program to support 95% mortgages, and £5bn of additional grants to help retail, hospitality, accommodation, leisure and personal care companies reopen.

The latest fiscal and economic forecasts could also improve on November’s forecast; with the deficit in 2020-21 expected to come in below the record £394bn forecast four months ago.

Sunak is also expected to flag the prospect of tax rises down the line to address the cost of the crisis, which could include an increase in corporation tax.

The latest survey of UK services companies will show how firms are coping in the lockdown.



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