Sunak Ditches G-20 to Prepare Potentially Radical U.K. Budget
U.K. Chancellor Sunak Confirms Budget Will Be on March 11
U.K. Chancellor of the Exchequer Rishi Sunak canceled a trip to meet global finance ministers in Riyadh as he seeks to agree a Budget with Prime Minister Boris Johnson that could rip up spending rules and put a heavier tax burden on wealthy people.
Sunak will discuss the Budget with Johnson on Wednesday and is considering measures that could include cutting the rate of pension tax relief from 40% to 20% for high earners and a so-called mansion tax on the costliest homes, according to an official. No decisions have been taken on the policies yet, and discussions are moving quickly, the official said.
Sunak was propelled into the top job at the Treasury last week after Sajid Javid’s shock resignation as chancellor. He had considered delaying the Budget as he settled into his work, but decided to press ahead as planned with the announcement next month. The pound gained.
“Cracking on with preparations for my first Budget on March 11,” Sunak said on Twitter. “It will deliver on the promises we made to the British people -- leveling up and unleashing the country’s potential.”
As he focuses on finalizing the Budget, Sunak will not travel to Riyadh for the Feb. 22-23 Group of 20 meeting of finance ministers, the Treasury said. Instead, he spoke to key counterparts by phone -- including U.S. Treasury Secretary Steven Mnuchin -- and is planning to attend the International Monetary Fund spring meetings in Washington, the official said. The U.K. will send another representative to the G-20 meeting in Sunak’s place, but it will be someone from the permanent civil service rather than a minister, the official added.
The new chancellor took up the top job last week after Javid dramatically quit following a face-to-face argument with Johnson over who should control the U.K.’s finance ministry.
Sunak accepted Johnson’s demand that the prime minister’s team should have more say over tax and spending decisions, and is examining whether to keep the fiscal rules agreed last year, or potentially to loosen the purse strings to spend more on state services and infrastructure.
Spending Rules
Under Javid’s guidelines, the government pledged to cut debt, keep public sector net investment below 3% of GDP and not to borrow for day-to-day spending. The former chancellor liked a tweet on Sunday which warned that Britons are already “overtaxed.”
But the change at the Treasury has opened the door for Johnson to rewrite or even scrap those fiscal rules, which Javid fought to establish last year. Prior to quitting, officials said Javid was planning to keep the Budget closely aligned to the costings set out in the Conservative election manifesto.
The Javid plan allowed for 100 billion pounds ($130 billion) of spending on infrastructure over the next five years, but if the rules were relaxed, it could open the way for investment in more eye-catching projects as Johnson seeks to cement support for his government in former Labour heartlands in the north of England.
To contact the reporter on this story: Jessica Shankleman in London at jshankleman@bloomberg.net
To contact the editors responsible for this story: Tim Ross at tross54@bloomberg.net, ;David Merritt at dmerritt1@bloomberg.net, Stuart Biggs
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