Finance minister Rishi Sunak announced a costly extension of his emergency aid programmes to see Britain’s economy through its current coronavirus lockdown, but announced a tax hike for many businesses as he began to focus on fixing the public finances.

Delivering an annual budget speech on Wednesday, Sunak said the economy will regain its pre-pandemic size in the middle of 2022, six months earlier than forecast, helped by Europe’s fastest Covid-19 vaccination programme.

Sunak promised to do “whatever it takes” to steer the economy through what he hopes will be the final months of pandemic restrictions.

In a first move to raise taxes, Sunak announced he would raise corporation tax to 25 per cent from 19 per cent from 2023, by which time the economy should be past the pandemic crisis.

“Even after this change the UK will still have the lowest corporation tax rate in the G7 —lower than the US, Canada, Italy, Japan, Germany and France,” he said. Reuters

Businesses with profits of 50,000 pounds or less would pay a new Small Profits Rate, maintained at the current rate of 19%.

Sunak also said he would freeze the amount of money that people can earn tax-free and the threshold for the higher rate of income tax until 2026.