Sunak Says U.K. Well Placed to Recover ‘Strongly’ From Pandemic
(Bloomberg) -- The U.K. economy is well placed to bounce back “strongly” from the pandemic, Chancellor of the Exchequer Rishi Sunak said, citing a successful vaccination program and incentives to spur business investment.
Revised data on Wednesday showed the U.K. economy shrank 9.8% in 2020, the most since the Great Frost of 1709. And while the economy is also forecast to shrink this quarter, the Bank of England sees it surging 14% in the year through the first quarter of 2022, an unprecedented pace in modern history.
“I am confident that we’re in a good position to recover strongly,” Sunak said in an ITV interview due to be aired later on Wednesday, according to a transcript. “Businesses have about a hundred billion pounds ($138 billion) of excess cash that they’re sitting on,” and are “raring to go” as the country’s third coronavirus lockdown eases, he said.
The U.K. has suffered one of the worst economic hits of any developed nation due to the pandemic, as well as one of the highest death rates. But Sunak pointed to one of the swiftest vaccination programs in the world as a reason for optimism, as well as the tax incentive for investment -- known as a super-deduction -- he announced in the budget this month.
The super-deduction, which comes into effect on Thursday, means firms can reduce their tax bill by as much as 25 pence for every pound they invest in capital. The government estimates it will unlock 20 billion pounds of investment a year for the two years it’s in place.
“What we’re seeing already is a lot of businesses responding to the super-deduction, accelerating capital plans,” Sunak said. “That’s what we want as we exit this pandemic and the economy reopens.”
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