UK Chancellor Rishi Sunak is going where few finance ministers have gone before in the Covid-19 pandemic, announcing future tax hikes to pay for relief measures. Those measures, which were extended in Wednesday’s Budget, have pushed government borrowing to record levels. Without corrective action, Sunak said, underlying debt would rise indefinitely. And while borrowing costs are affordable now, he pointed to the recent rise in UK Gilt yields as evidence this may not be the case forever. In this podcast, ING’s Developed Markets Economist James Smith discusses whether Sunak is right to be focusing on the deficit, whether the new support measures will be effective and when the UK economy will start to recover. 

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