Covid-19: Prepare for economic shock, warns Rishi Sunak
Besides the debilitating economic impact of Covid-19, the UK also faces a hit from January 1, when the Brexit process is completed and the UK moves out of the EU.Updated: Nov 22, 2020, 20:59 IST
Multi-billion-pound borrowing and steep decline in national income during the Covid-19 pandemic has set the stage for the UK facing “economic shock”, chancellor Rishi Sunak said on Sunday, as Britons remained anxious over meeting families during Christmas.
Prime Minister Boris Johnson is expected to announce a ‘Covid winter plan’ to be followed during Christmas on Monday. The current lockdown in England is set to end on December 2, but caution over easing by experts has prompted continuing curbs during the Christmas period.
Sunak, whose political stock has risen during the pandemic after he extended billions of pounds for furlough, grants to the self-employed and subsidies to businesses, indicated that income tax would need to rise next year. Pandemic-related borrowing has already reached nearly £250 billion.
He wrote in The Sunday Times: “People will see the scale of the economic shock laid bare. We can see the data every month, and obviously the shock that our economy is facing at the moment is significant.”
“Once we get through (the crisis) we’ll have to figure out what the best way of returning to sustainable public finances is. I’m hopeful that by the spring, with positive news on both mass testing and vaccines, we can start to look forward.”
Sunak is due to present the annual Spending Review in the House of Commons on Wednesday. Besides the debilitating economic impact of Covid-19, the UK also faces a hit from January 1, when the Brexit process is completed and the UK moves out of the EU.
The three-tier alert system before lockdown imposed earlier this month is expected to be strengthened with more curbs at each level, following criticism that the system was not effective enough. The revised system will be in place from December 3.
A prime minister’s spokeswoman said: “Everyone’s efforts during the current national restrictions have helped bring the virus back under control, slowed its spread and eased pressures on the National Health Service.”
“But the prime minister and his scientific advisers are clear the virus is still present - and without regional restrictions it could quickly run out of control again before vaccines and mass testing have had an effect. That would put in jeopardy the progress the country has made, and once again risk intolerable pressure on the NHS.”
As of Saturday evening, there were 19,875 new cases and 341 deaths in the last 24 hours across the UK.