Britain's chancellor of the exchequer Rishi Sunak has promised to pump £175 billion (€154 billion) into the economy in the country's biggest-spending Budget in almost 30 years. The budget came against the backdrop of slowing economic growth in Britain and fears of the economic impact of the coronavirus.
A few hours before the chancellor delivered his budget, the Bank of England announced an emergency interest rate cut, reducing its benchmark rate by 50 basis points to 0.25 per cent.
The bank also reintroduced a measure to offer banks four years of cheap funding and introduced a new scheme offering low-cost loans to small and medium-sized businesses.
Mr Sunak (39), who became chancellor less than a month ago, announced a raft of measures to combat the economic impact of the coronavirus, promising to give the National Health Service as much money as it needs to deal with the crisis.
He said the government would also fulfil its election pledge to transform the British economy, spending more than £600 billion on roads, railways, housing and broadband by 2025.
Most of the budget’s new spending will be funded by borrowing and much of it will be on current spending, including hiring more doctors, nurses and police officers.
The Northern Ireland Executive will get an additional £210 million to spend thanks to budget but there was no special treatment for the North this time around from the chancellor much to the disappointment of business leaders.
The Office for Budget Responsibility (OBR) said the spending pledges amounted to the biggest budget giveaway Britain has seen since 1992. It said economic growth this year would be its slowest since 2009, at the height of the banking crisis, cutting its prediction from 1.4 per cent to 1.2 per cent.
Businesses
The budget includes a number of measures targeted at small and medium-sized businesses, many of which will not have to pay business rates this year. It also removes VAT from digital publications, including books and newspapers.
Mr Sunak said his Budget was within the government’s current fiscal framework but he said he would re-examine the fiscal rules over the coming months.
“There is a live global debate about what our low interest rate environment means for fiscal strategy, about the case for fiscal policy to play a more active role in stabilising the economy and about the best ways to measure productivity-enhancing investment in the economy, such as human capital, or measuring value on the public balance sheet,” he said.
“So I want to take time to consider these questions over the coming months so that our fiscal framework allows us to make the right long-term decisions for our economic security and prosperity. I will review the fiscal framework, consulting widely with a range of experts. And will report back in the autumn, if I conclude that any changes are necessary,” he said.
Responding to the budget, Labour leader Jeremy Corbyn said it was no more than a partial effort to reverse some of the damage wrought to Britain by a decade of austerity under the Conservatives.
“The reality is that this budget is an admission of failure an admission that austerity has been a failed experiment that didn’t solve our economic problems but made them worse that held back our recovery and failed even on its own terms. And today’s measures go nowhere near reversing the damage that has been done to our country,” he said.
