Sunak Vows to Use ‘Fiscal Firepower’ to Protect U.K. Jobs
(Bloomberg) -- Rishi Sunak will pledge to use the U.K. government’s “fiscal firepower” to protect jobs and livelihoods, while signaling the need for future sacrifices to pay down the huge debts accumulated as a result of the coronavirus pandemic.
In his budget on Wednesday, the chancellor of the exchequer will outline a three-point plan to continue Covid support programs, fix a gaping hole in the public finances and build an economy fit for the future, according to a statement from the Treasury Tuesday.
“We will continue doing whatever it takes to support the British people and businesses through this moment of crisis,” Sunak will say in his statement to Parliament. But “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.”
The remarks suggest that even after racking up close to 300 billion pounds ($420 billion) of expenditure to fight Covid-19 and support businesses and workers through three damaging national lockdowns, Sunak is preparing to unleash even more state largesse on Wednesday.
On Tuesday, Business Secretary Kwasi Kwarteng all but confirmed that the flagship furlough program will be extended beyond its scheduled expiry date at the end of April. “It’s vital at this time that we provide the support that people will require,” he told the BBC.
Under Prime Minister Boris Johnson’s strategy for a gradual lifting of lockdown restrictions, some businesses will be forced to remain closed until June 21 at the earliest.
Extending support will add to billions a government debt pile now at 100% of GDP for the first time since the early 1960s. The Office for Budget Responsibility, whose forecasts underpin the budget, is expected to say the deficit will reach around 360 billion pounds in the fiscal year that ends on March 31, the highest in peacetime.
Sunak on Sunday promised “to support people and businesses along that path” of reopening, saying there’s “more to come” on his various assistance packages at the budget.
The government’s Coronavirus Job Retention Scheme pays furloughed workers up to 80% of their usual earnings, capped at 2,500 pounds ($3,480) a month. The most recent statistics show that as of Jan. 31, some 4.7 million workers were still dependent on the subsidies.
Since the program began operations last April, a total of 11.2 million jobs have been supported, peaking at 8.9 million on May 8. It’s paid out almost 54 billion pounds to date.
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