The chancellor’s second budget of 2021 struck an optimistic tone, but Sunak also warned that pressures caused by supply chains and energy prices will take "months" to be resolved.
“Today’s Budget does not draw a line under Covid, we have challenging months ahead,” he said.
“The pressures caused by supply chains and energy prices will take months to ease. It would be irresponsible for anyone to pretend that we can solve this overnight.”
With the economy now forecast to return to its pre-Covid peak at the turn of the year, Sunak laid out spending plans for the years ahead, but again emphasised that he remains wary of taking advantage of low borrowing costs.
Sunak outlined two new fiscal rules, to be put to a vote in Parliament in the weeks ahead.
The first will commit to ensuring underlying public sector net debt, excluding Bank of England borrowing, falls as a percentage of GDP.
The second commits to everyday spending being paid through taxation rather than borrowing. Both rules must be met by the third year of every forecast period.
The latter rule, however, will not include capital spending. Sunak said the government would aim to spend up to 3 per cent of GDP on capital investment, outlining plans for increased infrastructure and research & development spending.
The charter for fiscal responsibility sets out the remit of the Office for Budget Responsibility, but has not been updated for several years.