JEFF PRESTRIDGE: This Budget must stop us falling in to recession

I would put money on the Chancellor’s Budget this Wednesday being radically different to the one Rishi Sunak envisaged just over three weeks ago when he stepped into Sajid Javid’s shoes. 

Combating economic fallout from coronavirus will now be his overriding priority – and rightly so.

The Budget’s objective must be to prevent the economy falling into recession – and to introduce measures that will help the country’s economic backbone of small businesses weather the storms that lie ahead. 

Now is not the time for gimmicks that Chancellors are fond of announcing to grab attention.

Nor is it a time for tax rises – whether to insurance premiums or the fuel we put into our cars. Indeed, tax cuts should be made. 

Households and businesses need to be protected financially for as long as coronavirus remains a threat – even if it means Sunak veering from commitments made in the 2019 Conservative manifesto to balance the Government’s books.

An interest rate cut is essential and the sooner the better. This is not the time for procrastination. 

It should be announced by the Bank of England this week – and as bold as possible. 

Bank Base Rate should be trimmed from 0.75 per cent to 0.25 per cent – the level it dropped to in the wake of the Brexit vote in June 2016. 

Our economy is under greater threat now than it ever was back then.

Providing support for businesses must be the order of the day on Wednesday – measures that would help companies withstand cash flow problems resulting from coronavirus. 

For example, more time given to pay tax bills and maybe some temporary relief from the scourge of business rates.

Banks must also step up to the mark, extending overdraft facilities and allowing customers to delay loan repayments or extend loan terms. 

So far, UK Finance, the banking industry’s mouthpiece, has made all the right noises. But words are easy – it’s action that matters. 

After all, banks hardly covered themselves in glory in the wake of the 2008 financial crisis, forcing good companies out of business. 

For once, I don’t think this Budget should be about the needs of savers (sorry). It should be aimed at stopping this glorious country falling into recession.

Talking of savers, Nationwide Building Society is doing its bit to persuade people to squirrel money away inside a tax-friendly cash Isa.

It is dangling 60 one-off cash prizes totalling £500,000 before the eyes of those who top up their Nationwide cash Isa, take out a new one or transfer one from another provider.

If someone increases their Isa balance with Nationwide between now and the end of next month by £100, they will be eligible for the draw.

The odds of winning a prize are estimated at 7,600 to one – better than premium bonds (24,500 to one) – and some commentators such as Savings Champion’s Anna Bowes describe the initiative as ‘clever’. 

But with savings rate cuts around the corner, you are more likely to receive notification of a reduction in interest than a letter saying you’re a prize winner. Sorry.

Amid all the financial gloom, it’s good to learn that more people are saving into a pension provided by their employer. 

A result of pension auto-enrolment – one of the few positive savings initiatives to come from Government over the past decade. 

A process that requires employees to automatically enrol most workers into a pension, rather than leaving them to make the choice.

The latest figures, from the Office for National Statistics, indicate that 77 per cent are saving into a workplace pension plan – compared to 47 per cent eight years ago when auto-enrolment was introduced.

So a successful savings story? Yes, because more people are saving for retirement.

But no, because most are not saving enough.

Who’s to blame? Government, of course. 

Plans to bring more people into the auto-enrolment regime and bump up contribution limits were shoved into the long grass by the last Government.

That’s where they are likely to remain for the foreseeable future. 

A big shame.