LONDON: British Finance Minister Rishi Sunak said there would be no return to austerity and instead he will announce “quite a significant” increase in funding for public services in a one-year spending plan on Wednesday. “You will not see austerity next week,” Sunak told Sky News television on Sunday. “What you will see is an increase in the government’s spending on day-to-day public services, and quite a significant one, coming on the increase that we had last year.”
Sunak will announce the heaviest public borrowing since World War Two after Britain suffered the biggest economic crash in over 300 years. Economists think Britain is on course to borrow about 400 billion pounds ($531.28 billion) this year, approaching 20 percent of its gross domestic product, or nearly double its borrowing after the global financial crisis.
Sunak told Sky that the forecasts to be published alongside his spending blueprint would show the “enormous strain” that coronavirus has put on the economy and the priority for his plan would be to fight the pandemic. Britain’s finance ministry said on Saturday that Sunak was expected to announce one-year package worth more than 3 billion pounds ($3.98 billion) to support the state-run National Health Service (NHS) as it struggles with coronavirus.
Asked about reports that he would freeze public sector pay as part of an attempt to slow the surge in borrowing caused by the pandemic, Sunak said it was reasonable to look at state salaries in the context of the broader economy. “When we think about public pay settlements, I think it would be entirely reasonable to think about those in the context of the wider economic climate,” he said. Sunak declined to answer questions on possible tax increases saying he would not be talking now about future budget decisions.
Sunak has said there is genuine progress in Brexit talks with the European Union, but that it would be better to walk away from a bad trade deal than tie Britain’s hands in the future. Sunak, one of the few members of Prime Minister Boris Johnson’s senior ministerial team to have emerged from the COVID pandemic with an enhanced reputation, was thought to be one of the leading voices in the cabinet who wanted a free trade deal with the EU.
He told the Sunday Times that he hoped Britain and the European Union would secure an agreement. “Every day I am reviewing bits of text, so there is genuine progress,” he said. “Certainly, it would be preferable to have a deal.” But he added: “The major impact on our economy is the coronavirus. It’s absolutely not (a question of doing) a deal at any price.
“If we don’t get a deal, why is that? It is because they are refusing to compromise on what are some completely reasonable and very transparent principles that we’ve laid out from the beginning. We are not asking for … super-special treatment.” The two sides have been locked in talks for months and, while officials say they have made progress in the last few days, a substantial amount still needs to be done for an agreement to be in place and ratified by the year-end deadline.
Sunak gave the interview ahead of a spending review on Wednesday when he will set out the government’s spending over the next year, after COVID-19 blew a 200 billion pound ($266 billion) hole in Britain’s finances. He said he hoped that, by next spring, he would be able to start thinking beyond the current need to support the economy and jobs, and considering how he could return the public finances to a sustainable level. – Reuters
Source: Kuwait Times