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UK faces ‘economic shock,’ Chancellor warns

Chancellor of the Exchequer Rishi Sunak said on Sunday that the United Kingdom has come under “enormous pressure” as a result of the coronavirus pandemic and faces an “economic shock,” although he ruled out any recourse to austerity measures.

Sunak is scheduled to present, this week, a vast expenditure plan aimed at helping the nation’s finances recover after Covid-19. However, economic forecasts also show “the enormous pressure and stress that our economy is undergoing,” he said on Sunday on Sky News.

People will “soon see the scale of the economic shock laid bare,” the minister added in an interview with the Sunday Times, recalling that close to 750,000 persons had lost their jobs since the start of the pandemic.

The Chancellor noted that the best thing to do was to support the economy but warned that the State could not continue indefinitely to borrow at that level.

The UK is the country with the second highest number of Coronavirus fatalities in Europe, with over 54,600 deaths. In early November, Prime Minister Boris Johnson imposed a four-week lockdown in England, forcing bars, pubs and restaurants to remain closed until 2 December.

Following that announcement, the Chancellor unveiled massive aid to support the British economy, including an extension of the costly system of partial unemployment to March.

Despite his warning, Rishi Sunak has ruled out austerity measures for the time being.

“Now is the right time to focus on responding to the crisis and that means, yes, we will be borrowing quite frankly an enormous sum this year,” Sunak told BBC TV on Sunday.” He added that this was the right thing to do for the sake of the economy and the UK’s long-term public finances.

The spending plan expected to be announced this week includes 100 billion pounds in infrastructure spending. On Saturday, his ministry announced in a statement an additional three billion pounds (3.36 billion euros) to be released over a one-year period to help the National Health Service fight the impact of the Coronavirus.

This would help people to receive the medical care they need as soon as possible, the Chancellor said.

One-third of the amount would go toward catching up on the backlog of non-COVID examinations and operations while hundreds of millions of pounds are to be spent on mental health.

According to the ministry, the number of persons awaiting treatment for more than one year now went from 1,500 in February to 140,000 in September.

Aiding the economy comes with a heavy price tag: the public deficit could be as much as 400 billion pounds in the 2020-2021 budget, which ends in March, while the public sector debt has topped the 2,000-billion-pound mark for the first time.

The Brussels Times