The British Conservatives had spenders …

The UK economy fell 9.9% in 2020, the national debt exceeded one hundred percent of GDP. Inequality, poverty and homelessness are at historic levels. But the Minister of Finance, Rishi Sunak, in charge of this cocktail, is the most popular minister in Boris Johnson’s cabinet, the main candidate to succeed him.

Billionaire Sunak, married to billionaire Indian heiress Akshata Murthy, is a luminary of the British financial heart, the City. He is an ultra-conservative and orthodox who presented parliament with a multi-million dollar pandemic budget on Wednesday, the second with a marked Keynesian cut since taking office in February last year.

At an estimated cost of £ 65 billion, Sunak’s budget includes the extension until September of temporary unemployment benefit, “leave” or leave.

This license was inaugurated in the March 2020 budget and covers workers artificially supported by the state because their businesses had to close during the lockdown. Workers will continue to receive eighty percent of their wages, but from the release of jail in June, there will be a difference. In July, employers must contribute ten percent of the grant, which will increase to twenty in August and September. The puzzle is how many will recover activity levels to reach that instance alive.

Sunak said the subsidy for self-employed workers will also be extended until September and that 600,000 new beneficiaries who were not captured by the previous system will be included. Universal unemployment insurance will increase by eighty pounds a month for another six months. The gastronomy, leisure and tourism sector will benefit from new subsidies and maintain tax exemptions during this period. The announcements are in line with the policy followed by Sunak since last March’s budget. During this period, and without counting the current budget, the minister injected some 280 billion pounds in aid, subsidies, tax exemptions and investment in public services.

Who pays?

This interventionist policy has made the orthodox and ultra-liberal Sunak an unredeemed Keynesian for certain sectors of the Conservative Party who have criticized this increase in public spending and its financing with an increase in taxes on large corporations. In the House of Commons, the minister acknowledged that the budgetary situation is worrying, as shown by two data: the public debt exceeds two trillion pounds and the 2020-2021 budget deficit will be 370 billion. “Our economy has shrunk by 10%, the biggest drop in 300 years. The level of public debt is the highest since the end of the war. It will take a long time for the country and the world to recover from this situation, ”Sunak said.

Sunak’s budget does not include short-term tax increases, but the minister said that in the medium term, businesses will be primarily responsible for financing the deficit. The current corporate rate of 19% will drop to 25 in April 2023, although it will still remain the lowest of the G7 rich countries. At the individual level, the current income threshold on which taxes are levied will be frozen from April of next year until 2026. In fact, this will mean an increase in collection given the salary increase that is taking place. will produce during these years.

In parliament, opposition leader Labor member Keir Starmer recalled that the economic and health debacle of the pandemic did not come out of nowhere, but came after a decade of adjustment that decimated public services. For example, the National Health Service lost 17,000 hospital beds during this period. “The Conservatives have spent a decade in government weakening the fundamentals of our economy. Now they want to present themselves as the ones who are going to rebuild it. They don’t admit their past mistakes and they don’t have a concrete plan for the future, ”Starmer said.

The X factor

Beyond the debate, Sunik’s budget will necessarily depend on the trajectory of the pandemic. In this there is news of all colors. In the half-full glass, the UK has one of the most successful vaccination programs on the planet with more than 20 million vaccinated and hard evidence that mortality and contagion levels are declining, key to being able to reopen and reactivate the economy.

According to the National Statistics Office (ONS), the number of deaths of people over the age of 80 has seen the largest decline of all age groups. Between February 12 and 19, there were 1,622 deaths compared to 5,300 a month earlier – a drop of 69%. In the next age group, 70 to 79, the data is also optimistic: a drop of 69%. If we add the impact of confinement, the outlook is much more encouraging than at the start of the year when we feared an overflow of hospital capacity. In ten London boroughs, there are less than fifty new cases per 100,000 inhabitants.

In the half-empty glass, the government is still looking for the one infected with the Brazilian variant P1 that arrived last month from Brazil, via Zurich. The government is uncertain whether the two vaccines applied in the UK, Pfizer and Astra Zeneca, cover this mutation, although they believe they reduce the risk of serious infection and death.

Supply issues are another matter. As reported by the “Evening Standard”, there are fluctuations in the supply which will cause a delay in the next two weeks of the vaccination program. And the super X factor is the impact that the exit from the current confinement that begins next Monday with the big Big Bang will have: the simultaneous reopening of primary and secondary schools.

The government plan envisages four phases of “de-escalation” with a gradual reopening of all sectors until reaching a new normal in June in which even discos could enter. The progress from one phase to another will depend on four criteria: the progress of the vaccination program, that the levels of hospitalization and death continue to decline, and the same with the levels of infection and that there are no new mutations.

Rishi Sunak’s budget, his political ambitions and the fate of Boris Johnson’s government will also depend on these four criteria.