The City took the budget in its stride, with the FTSE 100 index of blue-chip shares closing nearly 1% higher at 6675 points (a two-week closing high).

Housebuilders led the risers, with Barratt Development and Persimmon both up 7% after the chancellor confirmed the stamp duty holiday extension and the help for 95% mortgages (both were widely trailed, though).

Airline group IAG (+6.8%) and hotel/restaurant group Whitbread (+5.5%) also rallied, on relief that the furlough scheme was being extended by another six months.

Rishi Sunak might note that UK 10-year gilt yields (the cost of government borrowing) rose today. At around 0.78% per year, it’s still very cheap to borrow for the next decade.

Other government bond yields also rose today, though, with global markets generally anticipating faster growth and a pick-up in inflation:

Rising bond yields would push up the cost of servicing the debt, but if that’s due to an economic recovery then tax receipts should move higher too, and welfare benefits should fall, balancing out the impact....

Financier-turned-philanthropist George Soros has another idea - the UK could issue ‘perpetual bonds’ to fund the Covid-19 bill; they would never be paid off, with bond-holders getting a regular payment, for ever...

These were first issued in 1752, and later used to fund the Napoleonic and Crimean Wars and World War I. Their issuing, in the context of covid-19 and the economic damage the pandemic has caused, looks eminently reasonable by historical standards.

Some economists will criticize the idea of issuing ‘Covid Consols’, by saying that using debt to fund government spending is irresponsible. But that argument rests on shaky grounds. The principal amount of ‘Covid Consols’ doesn’t have to be repaid by future taxpayers; only the annual interest has to be serviced. Issuing them in a climate where interest rates could hardly fall any lower has the advantage of locking in the current rates in perpetuity. The yield would be little more than 1%.

In its verdict on the budget the National Institute of Economic and Social Research says there was “little sign today of the required support through the transition to a post-Covid economy”. Prof Adrian Pabst, the NIESR’s deputy director for social and political economy, said:

We welcome the extension of the furlough and various support schemes to cushion the impact of Covid-19. What the Budget misses are policy interventions to address deep-seated problems that the pandemic has highlighted and exacerbated: active labour market policies to boost vocational and technical skills, increasing the stock of affordable housing, better access to finance for small- and medium-sized enterprise and a comprehensive industrial policy linked to more ambitious targets for the new UK infrastructure bank.

In his press conference Rishi Sunak said he was proud of the fact that a Treasury distributional analysis of the measures taken during the pandemic showed they helped the poor most.

Here is the document (pdf) he mentioned. And here are two of the charts in it.

This one estimates the impact of decisions taken since the election (including in this budget and last year’s budget, and in last year’s spending review) on households by income decile, as a percentage of net income. On this analysis, the poorest have gained most, and the richest have gained least.

And this chart illustrates the impact of particular measures on households by income decile, as a percentage of net income. Freezing fuel duty helps the poorest households most. The richest households lose most partly because of the higher rate threshold being frozen, but also because of the pensions lifetime allowance being frozen.

The report concludes:

Taken together, the CJRS [coronavirus job retention scheme], other government policies such as the Self Employment Income Support Scheme (SEISS) and increases to welfare have protected those with the lowest incomes the most.

Households in all income deciles are better off in 2021-22 as a result of tax, welfare and public service spending decisions taken since SR19 [the 2019 spending review], with the poorest income deciles supported the most as a percentage of net income.

Sunak ends his press conference by praising the work of people involved in the vaccine rollout.

Q: Will you extend the support schemes if restrictions are extended?

Sunak says he is extending support well beyond the end of the roadmap. That is to make allowance for the most cautious interpretation of the roadmap.

Q: Why are health workers not getting a pay rise?

Sunak says he addressed this in the spending review.

He says he pointed out then that people in the private sector had seen their pay cut, but not people in the public sector. That is why he paused public sector pay, apart from for health workers. But progression pay continued. And people on low pay in the public sector were getting pay rises. Overall, a majority of public sector workers will get a pay rise. He thinks this solution is fair.

Q: Forty of the 45 towns being helped by your towns fund are Conservative-held. Are these decisions party political?

Sunak says he is delivering for all areas of the country. There are free ports in all regions, he says.

Sunak says he is proud of analysis showing his interventions over the last 12 months have helped the poorest most.

He is referring to this Treasury analysis (pdf).

Q: Are you worried about taking the tax burden to its highest level since Roy Jenkins was chancellor? (See 2.19pm.)

Sunak says we have not had to deal with a pandemic since then.

And he says he is using the money to fund strong public services.

Sunak says, when corporation tax goes up, the UK will still have the fifth lowest rate in the G20 - as well as the lowest rate for the G7.

And he says the super-deduction tax relief amounts to the biggest tax cut for business on record.

Q: What would you say to the people who will enter the higher range of tax as a result of this budget? And has the pandemic changed your approach to big government?

Sunak says he thinks people understand the problems the government faces.

But he says he wants to introduce measures that will support the recovery, and that are fair. He thinks his tax plans pass this test.

On income tax, people on higher incomes will pay more. And no one will have their take-home pay actually cut.

And on corporation tax, Sunak says the increase will still leave the UK with the lowest rate in the G7. And many firms will not be covered by it.

At his press conference Rishi Sunak is now taking questions.

The first, from a member of the public, is about help for people who need unsafe cladding removed from property.

Sunak summarises the measures announced last month.

The BMA, the trade union and professional body for doctors and medical students in the UK, says that freezing the lifetime pensions allowance will drive some doctors out of the NHS.

A survey of BMA members carried out before the budget found that 72% said the move would encourage them to retire early.

The chair of the BMA pensions committee, Dr Vishal Sharma, explains:

Freezing the pension lifetime allowance is a bad decision and is creating the perfect storm – forcing an exhausted workforce – many of which are already planning to work fewer hours – to make some very tough decisions such as working less hours or leaving the NHS long before they would naturally retire.

If they don’t, they will face huge pension taxation bills because the NHS pension scheme is not flexible enough to allow doctors to vary and manage their contributions. They simply cannot keep working and face huge pension tax bills as a result.

Jon Greer, head of retirement policy at Quilter, agrees that the NHS could well suffer as a consequence as doctors may be encouraged to accelerate their retirement plans.

We’ve had the clap for carers, now we have the freeze for our frontline doctors.

We know that the previous reductions in the lifetime allowance were linked to a number of doctors leaving the NHS, or reducing their hours significantly, because many doctors see the lifetime allowance as a cap to their pension and the point at which they should consider retiring or reducing their workload.

In the Commons debate on the budget David Davis, the former Brexit secretary, and someone normally seen as being on the right of the Conservative party, said the £20 per week universal credit uplift should be made permanent. “I think in due course that will prove sensible,” he said.

Here is some more reaction to the budget from smaller parties at Westminster.

From the Lib Dem leader, Sir Ed Davey:

From the Green MP Caroline Lucas:

Four times in his budget speech, the chancellor said he was being honest with the British people. What would have been honest is if he had acknowledged the scale of the climate and nature crises, and had come up with a Budget which addressed them.

Instead, they were never mentioned – just a lot of vague talk about green growth that failed to take into account Professor Dasgupta’s landmark review, which the Treasury itself commissioned. This could have been the UK’s first wellbeing budget – shifting towards an economic approach fit for the 21st century. It could have signalled a redesign of the economy to serve the health and wellbeing of people and nature, not the endless pursuit of GDP growth on a finite planet.

From the SDLP leader Colum Eastwood (speaking in the chamber):

I find it interesting to hear the chancellor earlier speaking about whatever it takes and taking lots of credit for the necessary and essential furlough scheme. I can remember, I don’t know if anybody else can, I can remember him being dragged kicking and screaming almost to extending the furlough scheme at Halloween, and that left businesses confused and not knowing what they were going to do and people lost their jobs as a result of it.

From Plaid Cymru’s Treasury spokesman, Ben Lake:

Today the chancellor pledged to be honest with the public, but failed to mention that only 5% of the funding announced for Wales today is new money. And behind the rhetoric on ‘levelling up’, this is a budget that centralises decision-making in Westminster.

While European regional funding was distributed according to need and spent according to devolved priorities, replacement funding will be a fraction of previous commitments and allocated competitively. ‘Levelling up’ should lead to a fair distribution of decision-making powers across the nations and regions of the UK. But instead, a ‘Treasury-knows-best’ attitude prevails once again.

According to the Institute for Fiscal Studies, this budget implements the biggest net tax increase in a budget for almost 30 years.

Here are two verdicts on the budget from thinktanks.

From Paul Johnson, the director of the Institute for Fiscal Studies

What we can be sure of is that Rishi Sunak has spent big again, extending some support right through 2021 at a cost of an additional £60 billion or more. As a result borrowing is now forecast to again be above 10% of national income in the coming financial year. Whether the big fiscal tightening planned for subsequent years will actually happen is less certain. It continues to depend on spending being lower than planned prior to the pandemic. And it also depends on a large increase in corporation tax actually being implemented without additional measures to at least ease its long-run impact. Make no mistake, this proposed increase in the main rate of corporation tax is a big reversal of decades of policy direction and a significant risk. For all the rhetoric about it leaving the headline rate here below that in other G7 countries, our effective tax rate will be relatively high.

Mr Sunak made much of his desire to be honest and to level with the British people. The fact that he felt constrained to raise taxes by hitting companies and through freezing allowances, rather than through more explicit rises in people’s taxes, suggests there are limits to how far he wants to level with us as he attempts to raise the overall tax burden to its highest sustained level in history.

And this is from Ian Mulheirn, the UK policy director and chief economist at the Tony Blair Institute for Global Change

The pacing of tax rises is more moderate than many had feared. But pessimism about the economic outlook risks becoming self-fulfilling, confining the UK to the economic slow lane at a time when the risks from raising taxes too late are far less than going too early.

The relatively gradual withdrawal of fiscal support from the economy shows the government has learned something from the premature tightening in 2010. On today’s plans only emergency support is phased out over the coming year. 2022 will be light on tax rises and then the tightening begins to bite from 2023 when, by the OBR’s projection, the recovery will be largely complete. This is a better pacing of consolidation than many expected before the announcement and will give the economy support to recover in the short term. If one buys the OBR’s view that the economy will converge at a level 3% below its pre-pandemic trajectory, this is a reasonable path of fiscal tightening.

The problem is that the watchdog’s view may become a self-fulfilling prophecy of macroeconomic pessimism. There are asymmetric risks from tightening fiscal policy too early versus too late. Tightening too early leaves the economy smaller than it could have been, making us all poorer and increasing the debt burden relative to national income. Tightening too late, on the other hand, poses no such risk: debt is still historically cheap, and too much fiscal juice could easily be reined in by monetary policy. By assuming that running the economy hot for a while won’t raise the economy’s speed limit, the OBR’s forecast runs the risk confirming a fiscally conservative chancellor in his decision to take the economic low road.

An earlier post at 12.48pm said the extension of the £20 per week universal credit would be paid as a one-off lump sum. That is true for people who are still getting working tax credit (because the payments cannot be adjusted in-year), but people on universal credit will get the increase for the next six months as part of their normal payments. Sorry for the mistake. It has been corrected.

Not everything trailed before the budget arrived intact, and one proposed policy missing in action was an online sales tax. The idea behind the mooted tax is to impose a specific levy on internet shopping, so as to level the playing field between high street stores and online retailers. The latter, already blessed with cheaper rents, lower staffing costs, and a much larger market, also have an advantage in tax structure: business rates, the property taxes paid by companies, are much higher for valuable high street locations than exurban warehouses.

But the absence of the tax from the budget doesn’t mean it’s not going to arrive in some form in the next few months. In fact, the Treasury all-but-confirmed it was on the books in February, telling the Guardian: “Our business rates review call for evidence included questions on whether we should shift the balance between online and physical shops by introducing an online sales tax. We’re considering responses now.”

And if you’re experiencing deja vu, don’t worry: last year’s budget introduced the digital sales tax, which put a 2% levy on digital transactions carried out by large companies. That tax, which is almost entirely levied on large American firms, was intended to claw back some tax revenue from companies who take billions in Britain but book most of it overseas, with minimal UK tax payments as a result.

And here are verdicts on the budget from a Guardian Comment panel: Gaby Hinsliff, Miatta Fahnbulleh, Katy Balls and Tom Kibasi.

This is from Fahnbulleh’s contribution.

The extension of the furlough scheme in the short term was welcome: analysis by the New Economics Foundation has shown it will protect 90% of the 2 to 3 million jobs at risk by May. But the budget was woefully inadequate in its support for the millions who are struggling to stay afloat on universal credit and those that have been excluded. And an extra £4bn in planned cuts to day-to-day spending each year, on top of £10-12bn a year already set out in last November’s spending review, suggest that the government has learned nothing from the damage done to the country’s resilience by 10 years of austerity.

And this is from Kibasi’s.

The chancellor has been prepared to continue the colossal expansion in government spending, and to challenge his own party by setting out future tax rises on big business with a rise in corporation tax from 19% to 25% in two years’ time. The contrast with the timid demands set out in Keir Starmer’s speech last month – a recovery bond, retaining the £20 uplift in universal credit (which the chancellor promised to do, albeit temporarily), and no increases in council tax – was striking.

Yet in economics as in politics, the boldest measures are often the safest. Compared with the massive $1.9tn stimulus put forward by the Joe Biden administration in the US, both Labour and the Tories’ plans look rather inadequate. Indeed, a recent proposal for a £190bn stimulus to “boost it like Biden” proposed by the Institute for Public Policy Research thinktank fell on deaf ears. Why take the risk of going too small?

From Gavin Kelly, the chairman of the Resolution Foundation thinktank

In his Commons response to the budget Ian Blackford, the SNP leader at Westminster, said the budget “completely fails to recognise the sheer scale of the other pandemic our communities are suffering, the poverty pandemic”. He went on:

After a decade of under-investment and Tory cuts, the last year has deepened the UK’s poverty crisis and widened the gaps in inequality.

Six million people are now claiming universal credit, a 98% increase since the pandemic began.

The chancellor doesn’t understand what it’s like to be poor in Boris Johnson’s Brexit Britain.

Chancellor, do the right thing, this should never be temporary, it should be permanent ... Making the £20 universal credit uplift permanent has also got to extend to legacy benefits.

After being heckled by Boris Johnson, Blackford said the PM should “utterly, utterly ashamed” about his failure to support those self-employed workers who have not had government support.

Jeremy Hunt, the Conservative former health secretary who now chairs the Commons health committee, has criticised the budget for not addressing social care.

From Angela Rayner, the deputy Labour leader

From ITV’s political editor, Robert Peston

Rishi Sunak is emulating a second Labour predecessor, Denis Healey, through his decision to raise corporation tax from 19% to 25% from April 2023.

The OBR (who may have been swotting up on their history during the lockdown) explains:

After a decade in which successive Conservative Chancellors have cut the rate of corporation tax from 28 to 19 per cent, this one has chosen to raise it back to 25 per cent – the first time the rate has been raised since Dennis Healey did so in his 1974 Budget.

It is expected to raise £17 billion a year by 2025-26 and to take corporation tax receipts as a share of GDP to the highest they have been since the height of the Lawson boom in 1989-90.

All the Office for Budget Responsibility documents on the budget are here.

And here is its 222-page Economic and fiscal outlook (pdf) - its main report with its forecasts, and its analysis of the budget measures.

The Chancellor has done three things in this Budget, the Office for Budget Responsibility explains:

First, he has extended the virus-related rescue support to households, businesses and public services by a further £44.3 billion, taking its total cost to £344 billion.

Second, he has boosted the recovery, most notably through a temporary tax break costing more than £12 billion a year that encourages businesses to bring forward investment spending from the future into this year and next.

Third, as the economy normalises, he has taken a further step to repair the damage to the public finances in the final three years of the forecast by raising the headline corporation tax rate, freezing personal tax allowances and thresholds, and taking around £4 billion a year more off annual departmental spending plans, raising a total of £31.8 billion in 2025-26.

This chart shows how those tax changes and spending cuts will bite towards the end of the five-year forecast period:

All the Treasury budget documents are here.

And here is the key one - the budget red book (pdf).

Starmer says it is right that corporation tax is not going up this year.

But why is Sunak announcing increases now? Starmer refers to multiple reports saying that Sunak has told Tory MPs in private that he wants tax rises now, so that he can cut them before the election. He goes on:

Let me be crystal clear the proper basis for making tax decisions is the economic cycle, not the electoral cycle.

Starmer says, behind the videos, Sunak does not believe in an active state. He is desperate to return to free market principles, he says.

Back in the Commons, Starmer says this was not the bold, long-term plan the nation needed.

And he says that instead of putting his faith in free ports, the chancellor should have focused on making sure the government’s Brexit deal actually works.

We’ve updated some of the earlier posts covering what was said in Rishi Sunak’s speech. You may need to refresh the page to get the updates to appear.

Starmer says there was nothing in the speech about social care. The government may have forgotten about it, but Labour hasn’t, he says.

He says in September Rishi Sunak announced a plan for winter, and told MPs that people should not live in fear in the future.

But at the same time the government was ignoring the science. He says it did not order a lockdown, and as a result the second wave was much longer and harsher than it needed to be.

The chancellor is betting on a consumer-led recovery, he says. He jokes that he might do the same if his neighbour was spending tens of thousands of pounds redecorating his flat.

A Labour budget would have kept the £20 a week universal credit uplift until a better universal credit system were available, he says.

He says the budget should also have extended the criteria for the £500 self-isolation payments.

On housing, he says the plan for 95% mortgages reminds him of the Cameron/Obsorne right-to-buy plan, which he says just increased house prices.

Sir Keir Starmer is now responding for Labour.

He starts by saying it is a relief to be finally standing up in the Commons opposite the person who is actually taking the decisions.

Sunak ends by saying this is a budget that will “unite and level up”.

Sunak turns to free ports. He claims the UK can only implement them because it is out of the EU. (That is not strictly true. They were possible under EU rules.)

He says they will have different rules, making it easier and cheaper to do business. Simpler planning rules will help the construction of infrastructure.

He says eight locations for free ports are being announced today. They are: East Midlands airport, Liverpool, Felixstowe, Humber, Plymouth, Thames, Teesside, and Solent.

One will be in Teesside. Referring to it, Sunak sums up what his measures could achieve.

I see old industrial sites being used to capture and store carbon, vaccines being manufactured, offshore wind turbines, creating clean energy for the rest of the country, all located within a free port, with a Treasury just down the road, and the UK infrastructure bank only an hour away.

Sunak says there is another £150m fund to help communities take ownership of pubs, theatres or sports clubs.

Sunak says we need a different economic geography.

That means changing the location of economic institutions.

The Treasury, and the business department, will establish a new economic campus in Darlington, he says.

He says 45 new town deals are being announced.

Sunak says the Treasury works for the whole of the UK.

He says three new city deals are being announced for Scotland, and another three in Wales.

And the first allocations are coming under the £400m deal for Northern Ireland, he says.

Here are the new UK growth forecasts from the Office for Budget Responsibility, compared to last November’s forecasts.

• 2021: +4%, compared with +5.5% forecast in November
  
• 2022: +7.3%, compared with +6.6%
• 2023: +1.7%, compared with +2.3%
• 2024: +1.6%, compared with +1.7%
• 2025: +1.7%, compared with +1.8%

As you can see, growth forecast this year has been cut to 4%, from 5.5% (as the current lockdown wasn’t factory in back in November), followed by stronger growth in 2022.

Last year’s slump was less severe than the OBR expected, so the economy is expected to reach its pre-pandemic size in the middle of 2022, six months earlier than previously thought.

The slowdown from 2023 onwards, to below 2% per year, is disappointing, though.

Alpesh Paleja, chief economist at the CBI, says this is a ‘relatively cautious outlook’.

Mark Gregory, chief economist at EY UKI, is also unimpressed by the growth outlook:

Sunak says he is launching a programme to help firms with digital skills.

An extra £1.6bn is being allocated for the vaccine rollout, he says.

And there will be a new visa system for people with high-level skills. He wants the UK to attract the most skilled people for research.

Sunak says a new infrastructure bank will be set up in Leeds, with capitalisation of £12bn.

The government is launching a world-leading sovereign green bond, he says.

He also says he wants to make the City a global leader for voluntary high quality carbon offset markets.

Sunak says alcohol duty will be frozen for the second year in a row, and fuel duty for the 11th year in a row.

Sunak is now announcing a “super-deduction” - a tax break for firms that invest.

He says it will allow firms to reduce their tax bill by 130% of what they spend on investment.

He says under the current rule means a firm spending £10m on equipment gets a £2.6m tax reduction. Under this plan it would get one worth £30m, he says.

He says this has not been tried. But the OBR thinks it could boost investment by 10%, he says.

Sunak now turns to how this is all being funded.

The government is borrowing 17% of national income, he says.

Next year borrowing will be 10.3% of GDP he says.

But he says, because of the measures taken today, it will fall to 4.5% of GDOP in 2023, then 3.5%, then 2.9%, then 2.8%.

He says it would be “irresponsible” to allow borrowing to go unchecked.

Here are some of the key points from the budget so far:

Sunak announced more Covid support measures.

There will be a £300m culture recovery fund.

Business rates relief will be extended, in a move worth £6bn.

There will be £300m for sports clubs.

The reduced rate for VAT on hospitality and tourism will also be extended, he says.

Sunak says the restart programme will help over one million people get work.

There will be payments to firms to encourage them to take on apprentices.

• Incentive payments for firms hiring apprentices will be double, to £3,000.

There will be £126m to help people offer trainees shifts to apprentices.

Sunak announces another £19m for the victims of domestic abuse.

Sunak says over 700,000 people have lost their jobs.

The economy has shrunk by 10%.

Borrowing has reached wartime levels.

But we will recover, he says.

First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis.

Second, once we are on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that.

And, third, in today’s budget we begin the work of building our future economy.

Sunak starts by saying in his first budget he announced the inital response to Covid.

What was thought to be a disruption to our life has fundamentally altered it.

Many things have changed. But one thing has not. He said he would do whatever it took, and he has done so.

The Commons sitting is now being suspended for three minutes to allow MPs to leave and enter in a safe, socially distanced manner.

Danny Kruger (Con) asks if social investment tax relief will continue beyond April?

Johnson says Kruger will get an update in the budget.

Mike Kane (Lab) asks about HS2. Why can’t work on it start in the north now?

Johnson says if you start a project midway through, you multiply the costs.

Carla Lockhart (DUP) says the PM promised that there would be no checks on goods going from Britain to Northern Ireland, or the other way, after Brexit. Will the PM support Northern Irish ministers trying to achieve this?

Johnson says he will support these efforts. He will leave no option off the table. There will be unfettered access, he says.

Speaker Sir Lindsay Hoyle doesn’t sound very impressed by the various leaks and announcements that have preceded today’s budget.

Told by Boris Johnson that he will shortly hear “a budget for recovery”, the Speaker responded that “I think I already know most of it”.

Andrea Leadsom (Con) asks if the PM will try to persuade President Biden to deliver justice for the family of Harry Dunn.

Johnson says the government continues to raise this at the highest level.

Amy Callaghan (SNP) asks for an assurance that no young people will lose out a result of the abolition of Erasmus.

Johnson says the Turing scheme, which replaces it, will be better. He says Erasmus tended to favour higher-income students.

Sara Britcliffe (Con) asks if the PM will support a campaign to help town centres.

Johnson says there will be more on this in the budget.

Patrick Grady (SNP) asks why the Tories are distributing leaflets in Scotland saying a vote for them is a vote to stop a referendum. Doesn’t that mean a vote for the SNP is a vote to have one?

Johnson says it is extraordinary the SNP want a referendum. He says the people of the country want to see governments working together to address the Covid crisis.

Sir David Amess (Con) asks what the government will do about knife crime.

Johnson says more police officers are being recruited, and serious and violent offenders will stay in jail for longer.

Ian Blackford, the SNP leader at Westminster, also asks about the 50% cut in international aid to Yemen. He repeats the quote from the UN secretary general calling it a death sentence.

Johnson says anyone listening will have heard him say the government has given £1bn to Yemen over the last five years. The British people are continuing to help, he says.

Blackford says it is a 50% cut. Covid has hit developing countries the hardest. During the Tory leadership contest Johnson said he would stick to the 0.7% aid target. As PM he repeated that. Why is he breaking that promise?

Johnson says the government has given £280bn to support people across the whole of the UK during the Covid crisis. And the UK has contributed £540m to the international Covid vaccination effort.

From my colleague Peter Walker

Starmer says the system is not that robust. The government recently lost a court case on this. What would it take for the UK to suspend arms sales to Saudi Arabia.

Johnson says the government is following the consolidated guidance set up by Labour.

Starmer says aid to Yemen is being halved. He says the UN secretary general described this as a death sentence.

Johnson says “straightened circumstances” mean aid has had to be cut. But the UK is still stepping up to the plate. Few other countries have such a good record, he says.

Sir Keir Starmer, who is wearing glasses, asks if the PM agrees with President Biden that the sale of arms for use in Yemen should be suspended.

Johnson says the government is following the guidance.

Starmer says while the US has suspended arms sales to Saudi Arabia, the UK hasn’t. Why does the PM think it’s right to sell these weapons?

Johnson says the UK is part of an international coalition. It believes the legitimate government of Yemen was removed illegitimately. He says the UK has donated £1bn in aid over the last five years.

Kim Johnson (Lab) asks if the government will apologise for the removal of Chinese workers from Liverpool in the 1940s.

Boris Johnson says the Chinese community has made an amazing contribution.

Boris Johnson starts by saying tomorrow it will be three years since the Salisbury nerve agent attack. He pays tribute to the people of the city.

It hasn’t taken long for the Institute for Government thinktank to express some caution about the Treasury’s plan to relocate hundreds of its officials to Darlington. (See 11.36am and 11.46am.)

Budget day is always a good time to “bury” awkward government news, and Tracey Magee from UTV in Northern Ireland has posted two tweets about what might be this sort of story.

Quite how significant this is will become clear when we see the details.

From PA Media’s Sophie Morris in the Commons:

According to the Financial Times’ Sebastian Payne, Teesside will free port status – in a second budget offering to the north-east of England. (Rishi Sunak represents Richmond in Yorkshire.)

Shares in UK travel companies and hospitality firms have rallied today, following the news that the furlough scheme is to be extended to the end of September.

Airline group IAG, which is British Airways’ parent company, jumped 5% this morning.

Whitbread, which runs the Premier Inn hotel chain, and Brewers Fayre and Beefeater restaurants, is also up by about 5%, as is pub chain JD Wetherspoon.

Cineworld, which was forced to shut its cinemas during the lockdown, has rallied 8%.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says the prospect of more help in the budget is lifting UK-focused companies.

“With business lifelines expected to be extended and a dose of extra support expected to be administered to ailing shops, pubs and restaurants, there has been a buoyant start for hospitality and landlords in early trading in London. Airlines, who have relied heavily on the furlough scheme are also higher given the likelihood it will be extended into the autumn.

Expectations that the VAT cut to 5% will linger for longer for the hospitality industry helped boost Whitbread, which is reliant on bookings in its hotels and Thyme restaurants for its Premier Inn chain. It was the top riser on the FTSE 100 in early trading.

JD Wetherspoon is also higher with prospects that the cut will help it keep pint prices lower and volumes higher when its vast footprint of pubs reopens. Both companies have been big recipients of the furlough scheme and now it seems it is likely to be extended to the end of September, that has added another shot of relief.

The new Treasury office being opened in the north of England will be located in Darlington, civil servants have been told. These are from Newsnight’s Lewis Goodall.

Darlington was reportedly on a shortlist with Newcastle, Leeds or Bradford for the “Treasury North” office, which, according to the Financial Times, will be set up over five years and will eventually house 750 officials from the Treasury and other departments.

The House of Commons library has produced a 54-page briefing on the issues that will be addressed in the budget. Their papers are always clear, factual, objective and well worth reading if you have the time, and I’m sure this one is too.

The Commons transport committee has been taking evidence about the impact of Covid on the aviation sector this morning, and Michael O’Leary, the head of Ryanair, has told MPs that the support his industry had had from the Treasury had been “lamentable”. He said:

We had to refund over €1.5bn [£1.3bn] to customers in the last 12 months because our flights were cancelled by government order. There has been no support for that. We have received no support.

He also complained that Rishi Sunak, the chancellor, had “done nothing” about air passenger duty (APD). He said:

Where I will be most critical of the UK government is the one lever they have at their disposal – and that is this ridiculous APD tax per departing passenger – no effort has been made by the government to roll that back, reduce it temporarily, or in fact what we would call for, abandon it altogether, at least until traffic at UK airports recovers to pre-pandemic levels.

Rishi Sunak has done nothing about APD, which is the most egregious tax on air travel, because it is regressive and it hits the poorest people hardest.

O’Leary also claimed that the furlough scheme was not generous enough and he said it would be “very challenging and difficult return to normal operation or pre-Covid operation levels and profitability”.

Here are two photographs from the No 10 Flickr account showing this morning’s cabinet meeting (mostly virtual), where Rishi Sunak was briefing colleagues on the budget. (They are taken by official photographers, not press photographers.)

Boris Johnson is looking a bit glum in this one. (Perhaps VAT is going up on luxury home refurbishments.)

But, if the fist waving is enthusiastic, he seems to have cheered up at this point.

ITV’s business editor Joel Hills also suspects the surprise budget announcement will be a windfall tax. He must have been listening to the Andrew Marr interview too. (See 9.14am.)

The economic case for a windfall tax is that it would allow Sunak to raise revenue now with minimum risk to the economic recovery (because it would be targeted at firms awash with cash).

And the political case for one is that, as well as probably being popular with the public (Tony Blair won a landslide election victory in 1997 on a manifesto promising a windfall tax), it would also put Labour in a bind. Instinctively Labour MPs would support the idea, but doing so would contradict Sir Keir Starmer’s comment last week that “now is not the time for tax rises on families and businesses.”

Making a similar argument to Paul Johnson (see 9.32am), Sir Robert Chote, the former chairman of the Office for Budget Responsibility, told the Today programme that it would be a mistake to try bringing down the national debt too soon. He said:

The argument that we have borrowed an enormous amount of money - and goodness we have over the last year to 18 months - and that all has to be paid back very quickly, there is no robust case for making that argument.

Most economists would accept that if you have the size of the public debt jump up so you have a temporary increase in borrowing that increases your stock of debt, you don’t want to try to reverse that very quickly or very aggressively.

One of the lessons obviously people have taken out of the experience after the financial crisis is that even if you do have a bigger structural budget deficit, even with that you don’t want to go at it too aggressively in case you weaken the recovery and make the situation worse.

But that is not to say that if there is a permanent increase in the structural budget deficit from the hit to the economy, and in addition you decide you want a larger state coming out of this, then the decisions on tax can’t be put off for ever.

It is not that surprising that Chote and Johnson think along the same lines. Before he went to the OBR, Chote was Johnson’s predecessor as head of the IFS.

Paul Johnson, director of the Institute for Fiscal Studies, the leading public spending thinktank, told the Today programme this morning that although he expected the budget to include tax rises, he did not think they would start to take effect this year. He explained:

The bigger picture is that we’ve had the most awful, very deep recession with a huge amount of government support, so in some senses it hasn’t felt like that.

There are some suggestions and reports that the OBR’s (Office for Budget Responsibility) forecasts over the next few years are going to be rather more optimistic than they were back in November and if they are, if it looks like the economy has a good chance of bouncing back well, that will make some of his decisions a bit easier.

Because remember what the chancellor is not really thinking about is: ‘how can I pay back the debt that I’ve incurred over this couple of years?’.

It is much more: ‘if the deficit remains big in the coming years, what do I need to do to plug that hole?’. And if the economy is bouncing back then there is less of a hole to plug.

But there will still be something of a hole and that will mean, I expect, some tax rises, but not this year - in the next two or three years.

If tax rises are delayed until 2022, or the 2022-23 financial year, then that will be seen as vindication of Labour’s argument - set out by Sir Keir Starmer at PMQs last week, and restated by Anneliese Dodds, the shadow chancellor, in the Guardian yesterday, that tax increases should not happen “now”.