Budgets & fiscal events· Public spending· Economy and public finances The trillion-pound question Spring Budget 2020 and the tension between higher spending, low taxes and fiscal credibility 24 February 2020 Adam Corlett Jack Leslie Daniel Tomlinson This report focuses on the big choices that the Chancellor will have to make this year over the balance between day-to-day (current) spending, taxation and additional borrowing. 2020 will contain three ‘fiscal events’, with the Budget on 11 March starting a parliament-defining process that will run across the Spending Review and Autumn Budget to follow later in the year. We find that the Chancellor has more headroom than expected against the proposed current balance fiscal rule, but caution against eating into this (via extra borrowing) to fund additional current spending commitments. Instead, we offer tax raising proposals that could help the government finance their demands for additional spending. It’s clear, both from Spending Round 2019 and the Conservative Party manifesto, that austerity is over and the size of the state is set to rise. The question for 2020 is whether the Conservatives, having given up being a small-state party, are also content to say goodbye to being a low-tax party.