Chancellor Rishi Sunak is expected to use Wednesday’s summer statement to announce a series of economy-boosting interventions.
Cuts to VAT and stamp duty could be signalled as part of plans to protect “jobs, jobs, jobs.”
The OBR expects borrowing to be £300bn higher in 2020/21 as a result of coronavirus – a bill that, one way or another, will need to be paid.
Longer-term revenue raising options include cuts to the state pension triple-lock and levying National Insurance on pension incomes.
Tom Selby, senior analyst at AJ Bell said, “As the UK begins to emerge slowly (and in a few cases boozily) from lockdown, focus now turns to plugging the eye-popping £300bn hole left in the UK’s finances by COVID-19.
“The Chancellor will have to weigh-up his desire to kick-start the economy after its three-month slumber with the need to raise extra revenue via the tax system. A strong recovery should boost tax receipts and lower the amount spent on benefits, automatically improving the Government’s balance sheet.
“Given we are now effectively getting two Budgets in 2020, the Chancellor may decide to frontload the ‘good news’ items on Wednesday as he attempts to kickstart the economy – and save the tax nasties for his Autumn Budget.”