ANY Budget that is not thoroughly reckless is bound to be a balancing act or, in a more cynical formulation, the Chancellor seeing what he or she can get away with. That was especially true of this week’s announcements by Rishi Sunak.

In normal circumstances, the figures would have looked eye-wateringly irresponsible – around £65 billion of additional spending over the next two years, followed by a huge jump in corporation tax, from 19 per cent to 25% for the biggest firms. Even that, if it actually transpires, will claw back less than half of what’s being spent. But these are far from normal times; with large sections of the economy still mothballed, we face the greatest economic challenge in centuries.

The balance Mr Sunak had to find was between failing to provide short-term stimulus to give firms an incentive to spring back into action, produce rapid growth and minimise job losses, and the recognition that the colossal sums involved will eventually need to be found. In the past year, the Government has spent around 10 times more borrowed money than usual, with much of the economy on pause.

Even with interest rates at historic lows, headline government debt is heading above £2.5 trillion: a sum that, if paid off at £1,000 a second, would take more than 75 years to clear. Since that doesn’t include state or most public sector pensions, PFI commitments, carbon reduction costs, promised infrastructure investment and other expenditure that has been promised, the real picture is much worse.

If we are not to burden our grandchildren with such costs, a move towards fiscal restraint – whether it comes as tax rises, freezing allowances and public sector pay, or spending cuts – is inevitable. But to impose them now, when almost every sector of the economy has been brought to its knees, would be disastrous.

In the short term, withdrawing government support before businesses have a chance to get back on their feet would not only halt wider recovery in its tracks, close thousands of firms and potentially cost millions of jobs, it would make the expenditure and sacrifices of the past year pointless.

Herald View

Herald View

So the measures across the UK, such as extension of the furlough scheme, the uplift in Universal Credit, and grants to the self-employed are all welcome. For firms, the next two years’ tax breaks and “superdeductions” – which allow them to write off 25 per cent of capital investments – are a real incentive to move aggressively to build and produce growth.

There are other areas that merit attention: business rates, even before the pandemic, were wildly out of step with commercial rents, business turnover, decline of the high street and increasing dominance of internet – and distribution-based companies. Relief in that sector is a greater priority, and better value, than initiatives such as the stamp duty cut. The best service for those wanting to get on the housing ladder, for the construction sector and the general health of the economy would be to encourage much more building.

There are some reasons for optimism; despite the hardships endured by many, others (particularly pensioners, some furloughed public sector workers and those who can comfortably work from home) have actually stored up money during lockdown, and there is reason to believe that there will be a strong bounce back in sectors such as retail, hospitality and travel.

Partly because we have fallen so badly, the current growth estimates are for four per cent this year, and perhaps as much as twice that in 2022. To put that in context, there has only been one year since the financial crisis when figures reached the levels normal before 2008.

In Scotland, business should be provided with clear assurances that Holyrood also recognises the vital importance of enabling that sort of growth; without it, there is no recovery, no safeguarding of jobs, no ability to fund public services and repay public debt. As we keep saying, fiscal responsibility is important and support, for the moment, still necessary, but clarity on the Government’s intended direction of travel is absolutely essential.