Yesterday I spoke in Parliament to make an important point about our economic recovery after Covid.
With borrowing reaching 100% of GDP for the first time since 1963, the Government may need to increase Corporation Tax in order to balance the books.
As I said, this Government has a clear, bold plan to build back better. And our £280 billion response to this crisis was only deliverable because of the tough choices Conservative chancellors made over the last decade, to fix the roof while the sun was shining.
We've made decisive interventions that have preserved much of the muscle-power of the British economy during this period of suspended animation. And we've been praised by the IMF for the nature of the interventions that we have made.
Even before next week's budget, we have the Chancellor's £30 billion Plan for Jobs, the £12 billion Green Industrial Revolution, and £8.6 billion of accelerated infrastructure spending. And this stimulus is hugely exciting for areas like the Tees Valley, which had the chance to leverage great amounts of private sector investment off the back of Government commitments of this nature.
But not all of the decisions that lie ahead will be easy, there's no point in sugaring the pill.
Our public finances are gravely damaged and some of this damage of course will be repaired when the free market is allowed to operate normally again. However, we need to be realistic. Nothing that we said during the course of the 2010s about the danger of running unsustainable levels of public debt has changed.
The fact that borrowing costs are historically low is to be welcomed, but we should regard that as a stroke of great good fortune - that it coincides with our hour of need rather than as an ongoing inevitability.
I believe it would be nothing short of immoral to mortgage our children and grandchildren's futures to chance, for debt to exceed 100 per cent of GDP for the first time since 1963 is simply not sustainable.
So I would support and indeed urge some measures of fiscal consolidation in the budget next week.
These should be targeted with both hard-pressed families and key drivers of employer behaviour, like National Insurance, should be protected, but I can well see the sense in looking at other options to raise revenue in the medium term, including Corporation Tax.
Companies are realistic about the economic landscape. They care more about policy certainty and the general prosperity of the economy than about a moderate rise in Corporation Tax.
So I hope the Chancellor will be prudent as well as bold and emphasise the need for discipline and sound money next week as part of our recovery.
Simon
