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Latest updates: Rishi Sunak will reveal budget measures on Wednesday, including extending the Covid furlough scheme until the end of September
Making a similar argument to Paul Johnson (see 9.32am), Sir Robert Chote, the former chairman of the Office for Budget Responsibility, told the Today programme that it would be a mistake to try bringing down the national debt too soon. He said:
The argument that we have borrowed an enormous amount of money – and goodness we have over the last year to 18 months – and that all has to be paid back very quickly, there is no robust case for making that argument.
Most economists would accept that if you have the size of the public debt jump up so you have a temporary increase in borrowing that increases your stock of debt, you don’t want to try to reverse that very quickly or very aggressively.
Paul Johnson, director of the Institute for Fiscal Studies, the leading public spending thinktank, told the Today programme this morning that although he expected the budget to include tax rises, he did not think they would start to take effect this year. He explained:
The bigger picture is that we’ve had the most awful, very deep recession with a huge amount of government support, so in some senses it hasn’t felt like that.
There are some suggestions and reports that the OBR’s (Office for Budget Responsibility) forecasts over the next few years are going to be rather more optimistic than they were back in November and if they are, if it looks like the economy has a good chance of bouncing back well, that will make some of his decisions a bit easier.
