UK Chancellor Rishi Sunak’s presented his UK budget for 2021 and promises to do "whatever it takes", including extension of a huge jobs rescue plan until the end of September, to steer the economy through what he hopes will be the final months of COVID-19 restrictions.
UK finance minister expects that that GDP will return to pre-pandemic levels in Q2 2022 (November forecast was Q4 2022).GDP growth in 2021 is expected to reach 4% compared to November forecast of 5.5%. GDP growth in 2021 may reach 7.3% compared to previous forecast of 6.6%).Sunak sees the unemployment rate peaking at 6.5% compared with the previous forecast of 7.5%.
Budget includes additional support measures for businesses and households hit by the pandemic. Government will implement a new 'restart grant' for businesses in April. Retailers will receive up to £6,000 per premise and hospitality venues will receive up to £18,000 pre premise. Universal Credit uplift of £20/week will continue for another 6 months.
Also a new 'recovery loan scheme' will be introduced. Businesses of any size can apply for a loan of £25,000 to £10,000,000. Reduced VAT rate for hospitality to be extended until the end of September.
New mortgage guarantee policy will allow for just 5% deposit (95% mortgage) for homebuyers. Stamp duty holiday for homebuyers will continue until 30 June. Also additional £65 billion will be provided for COVID-support measures. UK corporate tax rate will increase to 25% from 19% in 2023.
GBPUSD saw a relatively small reaction to today’s UK budget release. The currency pair continues to trade around 1.3980 level. Source: xStation5
