Rishi Sunak’s skills as a politician were on full show in his interview on the BBC with Andrew Marr on Sunday. The chancellor wanted to shift the debate about the role of the government from fire-fighting to building, from the emergency actions to counter the damage caused by the pandemic to laying the foundations not only for a sustained economic recovery, but for building a more balanced society in the longer term.
On Wednesday he will have in his Budget, what is in effect his first opportunity to frame public economic policy for that longer term. It is true that the pandemic is far from over and there are real doubts as to how secure the recovery will be in the face of the fiscal tightening he has already announced. There will undoubtedly be some further damage to the economy from the current upsurge in Covid cases, and it may well be that the government will need to move to a plan B, reintroducing some curbs on movement.
There are further clouds ahead. At some stage in the coming months it is likely that the Bank of England will start to increase interest rates, as inflation is projected to increase to at least 4 per cent, double the target level. But much of the ground that was lost last year has been recovered, and the economy is now within a percentage point or so of the size it was when the pandemic struck. That progress is in part the result of the Treasury’s furlough scheme, a clear success. But that has now come to an end, and it is quite understandable that the chancellor should now seek to look further ahead.
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