4 March 2021

Building the Road to Recovery after COVID-19

Brian Tora responds to the 2021 Budget announcement by Chancellor Rishi Sunak.


For several years I sat on a panel that reviewed the Chancellor’s Budget measures as he stood at the despatch box for a newspaper serving the financial services industry. My brief, unsurprisingly, was to look at potential implications for investors ahead of the following day’s edition, with all the analysis that would be expected. Back then Budget details were kept closely under wraps until the speech actually started, but the measures announced to the House of Commons were pretty much useless without the copious background information that was distributed as the tax changes were declared.

The Red Book contains this information, providing the detail necessary to make a proper judgment on what effect the changes introduced by the Chancellor will actually have. With many of the measures that will be coming in already in the public domain, we need that detail in order to determine the full implications of this most crucial budget. Analysing what it will all mean takes longer than a few hours before a newspaper’s deadline, as I know to my cost. We can expect reverberations from this Budget to continue for a little while.

However, the most important measures to support the economy are simply extensions of support packages already in place. Paying for this support will clearly be challenging and there was little of austerity in the Chancellor’s speech. Indeed, he went out of his way to avoid putting obstacles in the way of getting the UK back on its feet. Mr Sunak is looking through the immediate challenges and endeavouring to lay the foundation for a post pandemic, post Brexit world. If successful, it could transform how we look in the longer term. Let us hope it all works.

Much will depend on how well the economy bounces back from the worst recession in 300 years. As it happens, the Office of Budget Responsibility has been more upbeat of late, while the Prime Minister has also been rather more optimistic in his pronunciations of what the future may hold in store. A robust recovery, with copious new jobs, is predicted, though how far away this might be and to what extent it will be sufficient for us to shrug aside the costs of fighting the pandemic is hard to assess. Suffice it to say we are having to deal with an exceptional set of circumstances, but the Chancellor seems to be siding with the optimists.

While the consequences of coronavirus and the measures taken to head off economic catastrophe have dominated market sentiment in recent weeks, the fact is that there is currently little else for investors to get their teeth into. It is too early in the month for much to emerge in the way of economic guidance, though we have seen the Nationwide house price survey, which indicated the value of our homes was continuing to rise, while the Halifax is expected to confirm this trend.

The year-end company reporting season is also winding down, with most of the major players having already declared. It will be the pandemic and the measures to combat it that will be at the forefront of investors’ minds for some time to come. Initial market reaction was encouraging, but there is plenty of time for investors to reconsider.

Brian Tora, Associate

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