Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
More than a year into the Covid-19 pandemic, the prospect of more government spending continues to support the financial markets.
European stocks are expected to rally this morning, as City traders prepare for today’s Budget — and welcome the prospect of Joe Biden’s $1.9trn stimulus package making it through Congress soon.
Budget-wise, Chancellor Rishi Sunak is expected to pledge to do “whatever it takes” to help businesses and people through the pandemic – adding to the £280bn of support already spent since the crisis began.
That will include a six-month extension to the UK’s job retention scheme, until the end of September, to protect jobs as the economy reopens. It means workers will continue to be guaranteed 80% of their salary for a further three months after the government hopes to have lifted restrictions in June, with the scheme slowly being phased out.
An extra 600,000 people will now be eligible for state financial help too, through the Self-Employment Income Support Scheme (previously the scheme used tax returns for 2018-2019, so recently self-employed people didn’t qualify. It will now include those who became self-employed in 2019-20).
Plenty of other measures have been trailed in recent days, including billions of pounds of funding for the UK’s new infrastructure bank; a new mortgage guarantee program to support 95% mortgages, and £5bn of additional grants to help retail, hospitality, accommodation, leisure and personal care companies reopen.
We’re also expecting:
- An extension of the £20 a week boost to universal credit.
- Extra measures to support the long-term unemployed through the Kickstart scheme for the under 25s and the Restart scheme for older workers.
- An extension to the stamp duty holiday for properties under £500,000.
The latest fiscal and economic forecasts could also show improvements on November’s forecast; with the deficit in 2020-21 expected to come in below the record £394bn forecast four months ago.
Sunak is also expected to flag the prospect of tax rises down the line to address the cost of the crisis, which could include an increase in corporation tax.
The latest survey of UK services companies, due this morning, will show how firms are coping in the lockdown.
Meanwhile in the US, the Senate is preparing to start debating Joe Biden’s $1.9trn stimulus package, which includes checks for families, more help for small businesses, and extra funding for schools, state and local governments and vaccine distribution.
But with the Senate tied 50:50 between Democrats and Republicans, getting a package finalised will be tough:
One reason late nights are expected and that will make the job of Democratic leadership more challenging is that senators are walking into a legislative minefield later this week since the relief bill is being considered under budget reconciliation rules that allow a free-flowing amendment process, meaning senators can force votes on as many amendments as they like.
That means if two Democrats break ranks, they could amend the bill with the backing of 49 Republicans.
- 9am GMT: Eurozone service sector PMIs for February
- 9.30am GMT: UK service sector PMIs for February
- 12.30pm GMT: The UK budget
- 1.15pm GMT: ADP payroll survey of US employment last month