What to Watch as Sunak Targets Covid, Deficit in U.K. Budget

(Bloomberg) -- Chancellor of the Exchequer Rishi Sunak is set to unveil his second U.K. budget as he tries to balance the need for prolonged aid to stem the damage wrought by the pandemic with calls to control the deficit.

With the prospect of the economy fully reopening still months away -- Prime Minister Boris Johnson has set June 21 as the earliest that can happen -- here’s what to expect in the chancellor’s statement on Wednesday:

More Covid Aid

Sunak says his priority is to protect jobs through the pandemic. He’s promised to support “people and businesses” as lockdown measures are gradually lifted.

On Tuesday night he announced:

Other measures are likely to entail:

Taxation

The chancellor has also signaled there’s pain ahead as he tries to rein in a fiscal deficit that the Office for Budget Responsibility has predicted will swell toward 400 billion pounds this tax year.

“If we don’t do anything, borrowing will continue to be at very high levels even after we’ve recovered from Covid -- debt will continue to rise indefinitely,” Sunak told Sky News on Sunday. “That’s not a good situation.”

Sunak may announce some tax increases on Wednesday, or he may detail what taxes are set to be lifted in the future. Here are some potential measures:

Treasury Announcements

Alongside the budget, Sunak is expected to publish an independent review into U.K. stock market listing rules as part of an effort to bolster the City of London post-Brexit.

As is customary in the runup to the budget, the Treasury has already trailed a number of other measures to be outlined, from changes to visa rules to billions of pounds of capitalization for a new infrastructure bank. Here’s a selection:

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