Sunak Must Borrow For UK To Actually Build Back Better

The chancellor has some big decisions to make on the country’s economic future

- Phil Thornton

It is only 15 years ago that a financial crisis very nearly brought the world economy to its knees, but some of the central lessons have been forgotten.

Although world leaders had the wherewithal to amass $1 trillion (£740bn today) to inject into the global economy to avert a depression, politicians swiftly rushed to claw back some of the money. The UK was in the vanguard of this move where the coalition government and then-chancellor George Osborne imposed a programme of austerity with a mission to balance the books via cuts to spending.

As the world emerges from a second major economic crisis brought on by the Covid-19 pandemic, there are renewed moves to set out a programme to reduce a debt burden. This time the first stab at a rebalancing will come in the form of a rise in the national insurance contributions that both employees and their employers pay. Within the grand scheme of an annual government budget of almost £850bn, the extra £14bn raised is neither here nor there.