Sunak in £30bn spending pledge
A £30 BILLION package to stimulate the economy in the face of the coronavirus crisis was announced by Chancellor Rishi Sunak as growth forecasts were slashed and the Bank of England announced an emergency cut in interest rates to 0.25%.
In a Budget which was hastily rewritten in response to the Covid-19 outbreak, Mr Sunak acknowledged the “challenging times” faced by the economy.
After less than a month in office, Mr Sunak delivered a Budget statement which acknowledged the British people were worried about the threat posed by the virus “but they are not daunted”.
Mr Sunak said there was “likely to be a temporary disruption” to the economy but insisted his plans would bring “stability and security”.
But Labour leader Jeremy Corbyn said the measures “go nowhere near reversing the damage” done by Tory austerity policies.
The scale of the challenge facing the economy was underlined by the Office for Budget Responsibility (OBR) in forecasts prepared before the full impact of the virus could be known.
Growth is expected to fall to 1.1% in 2020, down from 1.2% last year.
The 2020 forecast is dramatically lower than the OBR’s previous estimate of 1.4% and marks the weakest expansion since the 2009 recession.
In response to the virus, which the World Health Organisation has now declared a pandemic, Mr Sunak turned on the spending taps, with funding for public services, citizens and businesses which are set to suffer as the outbreak becomes more widespread.
Mr Sunak said: “Taken together, the extraordinary measures I have set out today represent £7 billion to support the selfemployed, businesses and vulnerable people.
“To support the NHS and other public services, I am also setting aside a £5 billion emergency response fund – and will go further if necessary.”
Other plans represented another £18 billion of “additional fiscal loosening” and “that means I am announcing today, in total, a £30 billion fiscal stimulus to support British people, British jobs and British businesses through this moment”.
The OBR forecasts borrowing will jump from 2.1% of gross domestic product (GDP) in 2019-20 to 2.4% in 2020-21 and 2.8% in 2021-22. Despite speculation he would ditch the framework on spending set by predecessor Sajid Javid, Mr Sunak said his Budget is delivered “not just within the fiscal rules of the manifesto but with room to spare”.
He also announced that fuel duty would be frozen for another year in response to pressure from Tory MPs.
Ahead of the spending review later this year, Mr Sunak said the OBR had declared the Budget represented “the latest sustained fiscal boost for 30 years”.