Britain’s New Chancellor Of The Exchequer Unveils Huge Emergency Budget

On the same day the Bank of England cut interest rates to record lows, Britain’s new Chancellor of the Exchequer unveiled a new budget to help battle against the economic impact of the coronavirus outbreak.

Chancellor Rishi Sunak introduced a £30 billion [$38.8 billion] package to help the British weather the effects of the outbreak.

Among other things, Sunak will eliminate business rates for many companies (including shops, cinemas, restaurants and music venues) in England for one year; extend sick pay for anyone who self-quarantines over fears they have the virus; and boost funding for the National Health Service to the tune of £5 billion [$6.45 billion].

The budget also includes a £500 million [$646 million] "hardship fund" for local authorities to help vulnerable people in their jurisdiction; as well as a "temporary coronavirus business interruption loan scheme" for banks to offer loans of up to £1.2 million [$1.55 million] to small and medium-sized businesses.

Sunak also announced more than £600 billion [$774 billion] for road, rail, housing and broadband projects over the next five years.

Sunak froze the fuel duty for another year, cancelled a planned hike in spirits duty; abolished a tax on tampons and said value-added tax on books, newspapers, magazines and academic journals will be eliminated starting on Dec. 1.

The chancellor also promised to "change the whole mindset of government,” citing plans to establish Treasury offices in Scotland, Wales and Northern Ireland and create a "new economic campus in the north, with over 750 staff from the Treasury.”

Sunak will provide an additional £640 million [$826 million] for the Scottish government, £360 million [$465 million] for the Welsh government and £210 million [$271 million] for the Northern Ireland executive.

Sunak, who was named chancellor only four weeks ago after the shock resignation of Sajid Javid, warned that the U.K. economy will be temporarily disrupted by the virus.

“I know how worried people are … what everyone needs to know is we are doing everything we can to keep this country and our people healthy and financially secure. This is an issue above party,” Sunak told Members of Parliament on Wednesday. “We will get through this together… We just had a general election where people voted for change … this budget delivers on that change. Yes, it is a budget that provides for security today, but it is also a plan for tomorrow.”

Jeremy Corbyn, the Labour Party leader, said he "welcomed" many of the measures to "head off the impact" of the virus, but said the extra funding for the NHS was "too little, too late" after years of spending cuts by the Conservatives.

Norman Smith of BBC commented: “If anyone still doesn't get how serious coronavirus is – then [Wednesday’s] budget makes it crystal clear. This was an emergency budget… [a] rescue package to save businesses from going bust and people losing jobs. But Mr. Sunak's spending spree went a lot further than helping the country cope with coronavirus. At times it almost felt like a Labour chancellor's budget as Mr. Sunak poured billions into the economy -- and all seemingly without breaking the government's existing tight fiscal rules.”

“That is a big emergency package to be announcing in a budget, signaling the government is taking the threat of the coronavirus to the economy extremely seriously,” wrote Rowena Mason in the Guardian. “The action is commensurate with a Treasury preparing for the possibility of a recession.”

Mason also noted that U.K. businesses have been “extremely anxious about the possible impact of cashflow difficulties if trading slows or staff are off sick because of coronavirus. The package looks quite comprehensive and generous for the smallest struggling businesses, but the small print will be important.”

The government will fund the package through increased borrowing.

In 2020-21, the U.K. government will borrow 2.4% of GDP, up from a 1.8% forecast in March 2019. In 2022-23, the government will borrow 2.5% of GDP.