The chancellor is likely to increase the taxes on business from their current 19% possibly to as high as 25%, although some say the Treasury could be floating that figure as a “straw man” to soften the country up for a rise in the coming years to 23%.
The Financial Times today said Sunak would be using Joe Biden’s plan to put up business taxes as an example of why he should act.
At 25%, business taxes would still be the lowest in the G7, although it would rather go against the Brexiteer view that the UK should become a low-tax nation to attract free trade and global investment.
Traders on the IG platform were calling the FTSE 100 up 27 points at 6689.5. CMC Markets had it rising similarly, with the Dax in Germany gaining 80 at 14,056 and France’s CAC 40 up 30 to 5828.
Sunak has to balance huge debts with a crippled economy in need of continuing support to recover from the impact of Covid.
While many economists say low interest rates on global markets means it makes sense to keep borrowing for the time being, he is set to signal tax rises and fiscal discipline.
He is likely to push through big short term spending measures, such as the extension to the furlough scheme, along with signals of big retrenchment further ahead.
Wall Street closed at fresh record highs last night and shares in the UK recovered from a wobbly start yesterday.
London shrugged off heavy falls on Asia thanks to central bankers here and in the US giving no indications they were looking to cut interest rates.
Today comes the next round of US GDP numbers, with the second count of the fourth quarter figures set to confirm a sharp slowdown from Q3’s 33.4% surge.
Expectations are that the world’s biggest economy may be recorded to have gained 4.2% rather than the 4% previously recorded for Q4.
US payrolls have begun looking stronger and consumers seem to be spending more, while Joe Biden’s $1.9 trillion stimulus package is around the corner, suggesting stronger growth to come.
Figures out early this morning from FTSE 100 bank Standard Chartered showed a slightly weaker fourth quarter than some had expected.
The Asia-focused group made $192 million against City expectations of $149 million although that was largely due to one-off hits.
Markets are likely to take a mixed view of the numbers, with retail banking revenue ahead of some forecasts but financial markets falling short of some analysts’ hopes, particularly around foreign exchange.