// IFS recommends a new budget on March 3 which balances the need for continuing Covid-19 support and discouraging people to use it
// Chancellor Rishi Sunak has been told to ensure next month’s budget secures the economic recovery from the Covid-19 crisis to date
A new study by the IFS has called for a budget on March 3 which balances the need for continuing Covid-19 support and discouraging people to use it.
Chancellor Rishi Sunak has been told to ensure next month’s budget secures the economic recovery from the Covid-19 crisis to date rather than try to start fixing the public finances.
IFS and Citi Research have warned of a hit to lower-income households ahead, in particular, if the furlough scheme is not extended beyond April.
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The study has warned that the failure to maintain employment support would trigger an increase in the jobless rate above its current five per cent as struggling companies collapse.
It suggested the Job Retention Scheme – and other support packages – be phased out gradually to allow an adjustment to normality.
It signalled that the better off were well-placed to shoulder a greater tax burden ahead as they had collectively built up an extra £125bn in savings over the past 11 months.
IFS director Paul Johnson said the chancellor’s second budget should seek to strike a balance between targeted help and “weaning the economy off blanket support”.
“In the recovery phase, Sunak needs to support jobs and investment, but also crucially needs to recognise and address the multiple inequalities exacerbated by the crisis,” Johnson said.
“Fiscal policy should lean against the effects of looser monetary (Bank of England) policy which has again benefited the older and wealthier at the expense of the younger and poorer.”
The report said Brexit and the country’s climate goals were additional pressures for the Chancellor, who is on course to borrow more than £400 billion in the current financial year alone to pay for the government’s pandemic response.