Budget 2021: 'Here's where I'll be looking to find out the real impact of Rishi's Sunak's speech'

Business and Economics Editor Joel Hills will be part of the ITV News team analysing Wednesday's Budget. Here, he shares his insight on what he'll be watching out for today - and why you'll need to look beyond Rishi Sunak's speech to get the full picture.

There’s a lot that has already been announced ahead of this Budget - but don’t worry, there will still be plenty of new details to look out for.

The Treasury's Budget book is brimming with facts but those facts tend to be polished and presented in a favourable light.

If you want the unvarnished truth, the independent Office for Budget Responsibility's Economic and Fiscal Outlook should be your guide. The OBR's economic outlook will be published immediately after the Budget this afternoon. This is what I’ll be looking for, probably in this order:

The total effect of government spending decisionsThe OBR will give a brief summary of the spending decisions the government has announced - and how much they are forecast to cost or raise for the exchequer.

If you're looking at the OBR's Economic and Fiscal Outlook when it's released, take a look for what's known as the Treasury Scorecard. This goes into more detail about each policy announcement.

In March's Budget, this table spelled out the scale of the extra spending around Covid-19 support for businesses and households. It revealed a huge tax break, the "super-deduction", designed for businesses to invest, and the size of the tax grabs with big increases in corporation tax and a four year freeze to the basic and higher rate thresholds of income tax, worth a total of £28 billion a year. In September, the chancellor broke his manifesto pledge not to raise National Insurance by raising NI contributions for employers and employees from April next year, raising £14 billion a year. This a bloomin’ enormous tax rise from a self-styled "low-tax" chancellor. There’s plenty of campfire gossip about alcohol tax reform, a freeze to fuel duty, reform of Air Passenger Duty. If they happen, this score card will tell you how significant they are.

How much has the pandemic 'scarred' our economy? The OBR will give their assessment on Wednesday.

Economic forecasts and 'scarring' Unemployment is lower than anyone feared. The rate has been falling since hitting 5.2% in December 2020 and the Bank of England thinks it has peaked. The economy recovered faster for most of this year than most predicted. The vaccine rollout was a roaring success and we learned to live with lockdown. The UK has indeed outperformed the other G7 economies - but remember, we were also one of the hardest hit. More recently we’ve lost a bit of momentum and the going is getting tougher. The OBR thinks that both the pandemic and Brexit have "scarred" the economy. The judgement on scarring is key. It’s the OBR’s assessment of the potential supply capacity of the economy and how it has changed. Covid has triggered lots of change. Some jobs no longer exist, others are emerging. Some business models don’t work anymore, some other businesses are thriving. A rebalancing is underway and it will take time to play out. Until it does, our economy will be less productive. This matters because if the economy going forward is likely to be smaller than was expected before the pandemic, then companies will make less money, households will earn less and the chancellor will collect less tax. In March, the OBR was quite pessimistic about how much permanent economic damage Covid has caused. It thought it would be the middle of 2022 before the economy returned to its pre-crisis size. In August, the Bank of England said we’ll get there by the end of the year. The national debt and deficit The economy has performed better than the OBR expected in March but will be smaller (in the long run) than we were expecting before the pandemic.

The government borrowed with gusto to cover Covid so the deficit - that's the difference between what the chancellor is spending and what he takes in tax - will be colossal by historical standards but not anywhere near as horrific as had been feared in March. The Institute for Fiscal Studies thinks borrowing in 2021/22 will be £50 billion less than the forecast made in March and £20 billion lower in 2025/26 compared to that same forecast.

If Public Sector Net Borrowing is below £50 billion a year by the end of the forecast period then that will look more "normal". But remember, it has taken a series of absolutely huge tax increases in March and September to offset the “scarring’ the pandemic has caused.

This Budget will be about the hit to living standards, says ITV News Business and Economics Editor Joel Hills. Credit: PA

The national debt as a percentage of GDP The government made a manifesto pledge to reducing debt over the lifetime of this parliament in 2024. Debt was pushed up substantially by the pandemic but expect the level to peak lower and fall faster than forecast in March. It should stabilise at 90% of GDP. Hurrah! Sort of. Fiscal rules Informed commentators tut and fuss or clap excitedly at fiscal rules but they are not of great interest to the average punter at The Dog And Duck. And fair enough too. But they do matter, particularly when you are carrying around a newly enlarged national debt of the size of ours.

Like some other advanced economies, the UK is, as the then Bank of England governor Mark Carney once put it, dependent on “the kindness of strangers” - or at least dependent on their confidence that the UK is good for the money we have borrowed.

Investors tend to punish flakiness with the sort of interest rates that brings a nation to its knees. Ask Greece. On Wednesday the OBR will - strangely - measure the performance against Philip Hammond’s fiscal rules set in his 2016 Autumn Statement. Expect a guide to Rishi Sunak’s though. There is no academic consensus on what debt as percentage of GDP should be. Different people have different views. There is a value to having a benchmark against which to measure performance, to having a chancellor tie his hands publicly in a way that causes reputational damage is he does something different.

The cost of living is rising. Credit: PA

Cost of living This Budget will be about the hit to living standards. Look out for what the OBR thinks will happen to inflation to wage growth and therefore to "real household disposable income".

The Universal Credit uplift has gone, energy bills have risen and will rise again in April, tax rises take effect in April (National Insurance and Income Tax), interest rates look set to go up. The OBR predicted a squeeze on living standards in March. How much worse does it look? Also, have a gander at house prices. Less money to spend + higher cost of borrowing = not great for house prices.

Spending Review - anyone for austerity? We will also be getting a multi-year spending review for what's known as Resource Departmental Spending Limits alongside the Budget. The detail to this will be in the Treasury document and will probably take time (and the wits of the Institute for Fiscal Studies) to unpick. In September, the chancellor announced a £14 billion top-up to his March 2021 spending plans but they are still less generous than in March 2020.

Put another way: despite a massive increase in pressure on public services as a result of the pandemic, Rishi Sunak plans to spend no more overall than he was intending to before the pandemic. As it stands, the chancellor’s plans suggest things will be really tight over the next two years. The Institute for Fiscal Studies calculates that while overall spending on public services will rise, "unprotected" budgets (prisons, courts, further education) will face potential cuts of more than £2 billion in 2022/23. Although funding for unprotected budgets is set to grow by more than 8% in 2024/25 after two years of real terms cuts. The size of the state - public spending - is set to reach 42% of GDP, which is very high by "normal" UK historical standards - that is, outside items of crisis. The tax burden imposed by the government is set to reach the highest level ever sustained. The chancellor has already announced big increases for some areas - health and social care is going up considerably, schools and defence will get extra funding - but the rest get cuts in the current financial year and Covid disruption will likely persist. The NHS is pulling in extraordinary amounts of resource.

Could a freeze on beer duty be one of the rabbits the chancellor pulls out of his hat? Credit: PA

Will Rishi Sunak pull a rabbit out of the hat?

Will the chancellor make a big announcement in today's Budget that hasn't been pre-announced?

Labour is calling for a cut in VAT on domestic fuel. Trebles all round, including the wealthy. - but not very well targeted at those in need. A more targeted way of reaching those whose incomes are disproportionately spent on heating is a one-off winter top-up payment to those on Universal Credit, disability benefit and/or pensioners. David Gauke, the former Chief Secretary to the Treasury, was out and about promoting changes to the Universal Credit taper, which calibrates the rate at which the benefit it withdrawn and arguably doesn’t offer the strongest incentive to return to low-paid employment. Beer and fuel duty freezes are always cheap(ish) crowd pleasers, but how would a fuel duty cut look ahead of next week's COP26 climate change summit taking place in Glasgow? And I think a one-off windfall tax on the online retailers for whom Covid has turbo-charged profits would a popular, easy sell. Although it might upset Amazon, and therefore the US…

Joel Hills will be part of the ITV News team delivering live coverage of the Budget in a special programme from 12.15 - watch live on ITV and on