UK governments need to ask Parliament for its approval to spend money, as well as to raise taxes. In the Budget, the government announces new taxes, and changes to existing ones. This needs to happen each year because some major taxes—such as Income Tax—are technically only temporary and so Parliament must approve them each year.
The Chancellor gives a speech to the House of Commons to set out their Budget. This includes an overview of the how the UK economy is doing. It draws upon a five-year forecast for the economy and public finances produced by law by the Office for Budget Responsibility, an independent body.
This year, the budget date has been set for March 11.
In the Times, IFS Director Paul Johnson argues that Boris Johnson and Sajid Javid “will want to address an economy that has been stuttering for some time”.
New forecasts for the UK economy produced for the Budget are likely to show a much worse situation for the UK economy in 2020-21 than anticipated ahead of the election. Sajid Javid has a fiscal target to ensure that current spending is no higher than tax receipts, and so borrowing is for investment only. “He will find that seriously constraining”, Paul Johnson writes in the Financial Times.