UK-based Sunak pledges to vow no matter it takes within the new COVID funds plan
© Reuters. FILE PHOTO: British Chancellor Sunak leaves after appearing on BBC TV’s Andrew Marr Show in London
By William Schomberg
LONDON (Reuters) – UK Treasury Secretary Rishi Sunak will pledge on Wednesday to “do whatever it takes” including a five-month extension of a huge job-saving plan to help the economy get through the final months of COVID he has hoped for control restrictions.
Sunak has already taken out the UK’s largest borrowing since World War II and will turn to the bond markets again in his budget speech. The task of regulating public finances will only begin when a recovery is in sight.
“We are using the full extent of our fiscal firepower to protect the jobs and livelihoods of the British people,” Sunak will say, according to excerpts from his speech, which is due to begin at 1230 GMT.
“Firstly, we will continue to do everything we can to support the British people and businesses at this moment of crisis,” he will tell Parliament.
“Second, once we are on the recovery path, we need to start setting public finances – and I want to be honest with our plans to do so today. And third, in today’s budget, we start building our future economies. “
The UK has suffered the largest number of COVID-19 deaths in Europe and the worst economic shock among large rich countries. It has shrunk 10% in the last year, the worst slump in three centuries.
Sunak has so far spent nearly £ 300 billion ($ 419 billion) on emergency relief efforts and tax cuts.
Many companies have also been hit by Brexit after the UK left the European Union’s single market on Jan. 1 and the government faced the challenge of large investments to deliver on its promise to create a net carbon free economy by 2050.
Evidence of a Brazilian variant of the coronavirus has served as a reminder that Britain’s rebound from the pandemic is not a given, even as it advances with Europe’s fastest COVID-19 vaccination program.
Sunak’s immediate priority will be to prop up the economy as Prime Minister Boris Johnson gradually lifts lockdown measures, starting with schools reopening in England next week. Most of the restrictions are expected to be lifted by the end of June.
Sunak will announce that it will extend its central vacation program, which now includes around one in five employees in the private sector, to the end of September and expand support for the self-employed.
As the economy reopens, employers have to make a contribution to the costs. They pay 10% of the hours their employees are not working in July, increasing to 20% in August and September.
The program was due to expire at the end of April after 13 months, when it has cost an estimated £ 70 billion, raising fears of a sharp spike in unemployment.
Over the weekend, Sunak said he would spend an additional £ 5 billion on grants for hard-hit businesses.
Former IMF chief economist Ken Rogoff, who once warned of the risks of rising national debt, told BBC Radio that he had told Sunak to keep spending going.
“I said we were in the middle of a war,” said Rogoff. “You shouldn’t be overly concerned about budget deficits and debt. That is what you can worry about on the other hand. You are looking for disaster relief.”
The BBC said Sunak would extend an emergency welfare increase that was due to expire in April.
Sunak said he would be “honest” about the cost of the unprecedented support, pointing out that the cost of borrowing has risen from record lows recently, reflecting the prospect of a global economic recovery and the nearly $ 2 trillion Stimulus plan was triggered by US President Joe Biden.
A Reuters survey of traders found that the UK is expected to sell nearly £ 250 billion ($ 347 billion) in government bonds in fiscal year 2021/22. This is the second highest total ever recorded.
The UK budget watchdog was also expected to forecast £ 180 billion in borrowing for the coming year, compared to £ 394 billion it had forecast for 2020/21.
Sunak is expected to announce an increase in the UK’s low corporate tax rate as the first signal of its plans to fill the budget gap in the future.
The Sunday Times said it could freeze thresholds above which people start paying income taxes and the higher personal income tax rate in order to generate more income without breaking a 2019 election promise not to raise tax rates themselves.
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