UK to unveil spending plans in face of surging debt

Agence France-Presse . London | Published: 22:32, Nov 25,2020

 
 

Britain’s government on Wednesday announces its spending plans for the next year amid soaring debt to support the virus-ravaged economy and as the nation embarks on its post-Brexit future.

Finance minister Rishi Sunak will address parliament from around 1230 GMT, with one week to go until England ends a second lockdown aimed at curbing a fresh wave of coronavirus infections.

Sunak will outline departments’ budgets for 2021/2022, with Britain yet to strike a post-Brexit trade deal with the European Union ahead of a transition period ending December 31.

Speculation is growing that with UK debt soaring, prime minister Boris Johnson’s Conservative government will either cut or suspend Britain’s commitment to spend 0.7 per cent of national income on foreign aid.

Ahead of his spending statement, Sunak said that his ‘number one priority is to protect jobs and livelihoods across the UK’.

‘This spending review will ensure hundreds of thousands of jobs are supported and protected in the acute phase of this crisis and beyond with a multi-billion (pound) package of investment to ensure that no-one is left without hope or opportunity,’ the chancellor of the exchequer added.

Having already splashed billions of pounds on a furlough jobs scheme to keep millions of British workers in their jobs during the pandemic, Sunak is expected to launch a three-year jobs programme to help over a million unemployed.

But Sunak is not expected to give pay rises to public sector workers such as nurses and teachers who have played key roles during the Covid-19 outbreak.

Outside of pay rises, the National Health Service will receive a boost totalling £3.0 billion ($3.9 billion, 3.3 billion euros), the Treasury has already revealed.

The military meanwhile is to receive extra spending of £16.5 billion over four years, the biggest such investment since the end of the Cold War, as Britain positions itself for its post-EU future.

Recent official data shows UK state debt has exceeded £2.0 trillion for the first time as the pandemic pushed the UK economy into a record recession, undercutting tax revenue just as government crisis spending soared.

While Sunak has warned that the British economy is under ‘enormous strain’ because of Covid-19, the chancellor ruled out cuts to public services.

Following Wednesday’s statement, Britain’s Office for Budget Responsibility will publish new economic growth forecasts, further detailing the damage caused by the virus.

The OBR is expected to reveal an explosion in public borrowing that could reach almost £400 billion for the current financial year to March.

Britain has been one of the worst-affected countries in the world in the outbreak, registering more than 54,000 deaths from 1.4 million cases.

At the start of November, England effectively shut down for the second time this year to try to curb spiking virus infections and deaths.

To help cushion the blow, the government rolled out a new multi-billion-pound support package by extending its furlough jobs scheme until the end of March 2021.

The government’s mammoth package is in coordination with the Bank of England, which is pumping huge amounts of fresh cash into the economy to support businesses and has slashed its interest rate to a record-low 0.1 per cent.

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