U.K. Eyes March Budget and Spending Boost in North of England
(Bloomberg) -- Prime Minister Boris Johnson’s freshly re-elected government is seeking to hold its first Budget in March, rewriting spending rules as it does so, according to a person familiar with the matter.
Chancellor of the Exchequer Sajid Javid was forced to scrap his planned Autumn Budget because of this month’s snap election. A rescheduled event wasn’t expected until after the U.K. left the European Union on Jan. 31, with some speculation it would happen as early as February.
Since winning the election, Johnson promised to heal divisions in a country that’s been split by Brexit, in particular by showing support for people in districts in the North of England who voted for his Conservative Party for the first time. Johnson’s top adviser Dominic Cummings has also criticized Treasury spending rules for favoring London and the South East.
Ahead of the Spring Budget, the Treasury will change the formula used in its so-called “Green Book”, which guides investment decisions on everything from infrastructure to business development.
The aim is to narrow the productivity gap between the north and south of England, which academics at Cambridge University last year described as “extreme” compared with other wealthy nations. They found the current cost-benefit analysis model favors investments in areas where the economy is already stronger.
A spokeswoman for the Treasury said: “We work across government to ensure investment is focused on where it is needed across the U.K. and delivers value for money for the taxpayer.”
The changes to the investment rules were earlier reported by the Times newspaper.
Javid has set three fiscal rules for this government: To have the current budget in balance no later than the third year of the forecast period, to allow some borrowing for capital investment, and to reassess plans in the event of a pronounced rise in interest rates.
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