Sunak delivers crisis Budget to rescue Covid-hit UK economy
Rishi Sunak warned the British economy has been hit “hard” by the coronavirus pandemic as he announced budget measures to save jobs, help businesses and begin the painful process of cutting the UK’s vast deficit.
With the country mired in a third national lockdown, the chancellor of the exchequer has made clear that safeguarding jobs is his priority for the coming months.
He confirmed he is extending furlough wage payments to people whose jobs have been suspended because of the pandemic restrictions, potentially costing another 9 billion-pounds ($12.6 billion). There will also be extra support for self-employed workers, and grants to help companies re-start.
Sunak on Wednesday told a cabinet meeting that the pandemic has hit the economy “hard” and that the country is “borrowing on an extraordinary scale -- equivalent only to wartime levels,” according to government spokesman Jamie Davies. Sunak argued it “wouldn’t be right or responsible” to ignore the problem, Davies said.
The extended aid for workers and businesses will help prevent a surge in unemployment. But it will also add to the 300 billion pounds the UK has spent fighting the pandemic amid the worst slump in three centuries. The chancellor is mindful of the enormous debts the pandemic has forced him to rack up, with the country on course to borrow about 360 billion pounds in the current tax year, a peacetime record.
“Once we are on the way to recovery, we will need to begin fixing the public finances -- and I want to be honest today about our plans to do that,” Sunak said. He’s hinted heavily in the past week that either tax rises or spending cuts will be needed -- or both.
While the national debt has risen past a record 2 trillion pounds, historically low interest rates means the cost of servicing it is low. That gives the chancellor breathing space, although he’ll also have an eye on the next general election due in 2024.
Other budget measures include:
- An overhaul of market listings rules to boost the City of London
- 22 billion pounds of capital and loan guarantees to capitalize a new national infrastructure bank
- 5 billion pounds of grants for pandemic-hit businesses
Under Wednesday’s plans, furloughed workers will now receive 80% of their wages through to the end of September -- a five-month extension. Eligibility for grants for self-employed workers was expanded to include another 600,000 people.