UK budget spends big on war against coronavirus

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March 4, 2021

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UK budget spends big on war against coronavirus

Source: Agencies | 00:05 UTC+8 March 4, 2021 |

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Britain’s Finance Minister Rishi Sunak announced a costly extension of his emergency aid programs to see Britain’s economy through its current coronavirus lockdown, but announced a tax hike for many businesses as he began to focus on fixing the public finances.

Delivering an annual budget speech yesterday, Sunak said the economy will regain its pre-pandemic size in the middle of 2022, six months earlier than previously forecast, helped by Europe’s fastest COVID-19 vaccination program.

But it will remain 3 percent smaller in five years’ time than it would have been without the damage wrought by the coronavirus crisis and extra support is needed now as the country remains under coronavirus restrictions, he said.

Among the new support measures was a five-month extension of his huge jobs rescue plan and more help for the self-employed, the continuation of an emergency increase in welfare payments, and an extension of a VAT cut for the hospitality sector.

A tax cut for home-buyers was also extended until the end of June.

“First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis,” Sunak told parliament.

“Second, once we are on the way to recovery, we will need to begin fixing the public finances — and I want to be honest today about our plans to do that. And, third, in today’s Budget we begin the work of building our future economy.”

Announcing forecasts by the Office for Budgetary Responsibility, Sunak said the economy was likely to grow by 4 percent in 2021, slower than a forecast of 5.5 percent made in November, reflecting the current lockdown which began in January.

Looking further ahead, the OBR forecast gross domestic product would grow 7.3 percent, 1.7 percent and 1.6 percent in 2022, 2023 and 2024 respectively. In November, the OBR had forecast growth in those years of 6.6 percent, 2.3 percent and 1.7 percent.

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UK budget spends big on war against coronavirus

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