New figures published by the ONS this morning show the UK economy shrank by 2% in the first quarter of 2020, the biggest decline since Q4 of 2008, though less than the 2.5% experts had predicted; and March’s -5.8% being smaller than the expected 7.9% drop. Compared internationally, the UK holds up quite well. Though all countries will be bracing even harder for April’s figures…

The figures coincide with this morning’s Telegraph splash of internal Treasury estimates forecasting a £337 billion budget deficit by the end of this year – £282 billion higher than expected in the March Budget. In the base case scenario, the Treasury is advising Rishi Sunak he will have to increase taxes or cut spending to raise between £25–£30 billion a year.

In typical Treasury fashion, the Chancellor has been presented with options for raising taxes; with the leaked paper advising reliance on increasing income tax, National Insurance, VAT or corporation tax, or reform of pensions tax. Will Rishi want to go down in history as the top Tory tax-hiker?