RISHI SUNAK has said saving jobs will take priority over tax rises, even as he noted that record borrowing and a £2 trillion debt pile cannot be sustained for long.
The UK government is grappling with one of the worst economic hits to the country in three centuries, and the chancellor has repeatedly warned that relying on such vast borrowing from the bond markets could trigger a financing crunch in the long term.
But, with companies from airlines to pubs shedding hundreds of thousands of jobs and government spending soaring, Sunak is looking at ways to boost state revenue.
“The priority right now is on jobs,” he told Sky News on Tuesday (6), when asked about possible tax rises. “My overwhelming focus at the moment is trying to protect and support as many jobs as possible.”
Asked about tax rises in a flurry of interviews, Sunak maintained that jobs were the short-term focus, but made it clear that he would have to tackle Britain’s debt mountain in the medium term.
“Obviously this can’t carry on forever,” he told BBC. “This level of borrowing, which will be record levels, pretty much, this year, is not sustainable in the long run.
“Once we get through this, I think people should rightly expect us to make sure we have a strong set of public finances.”
The chancellor added that the virus was going to be a fact of life for a long period of time. “That is going to mean that our economy undergoes some change, and it is right for that to happen, and is therefore wrong to pretend to people that they can always, in every circumstance, go back to the job that they had before this started.”
Sunak’s emergency spending measures, including subsidies to slow a jump in unemployment, will cost about £200 billion this year and have already pushed public debt over £2 trillion, or 100 per cent of UK’s gross domestic product.
The chancellor also expressed sadness over seeing city centres deserted, adding that the government would need to look at what it could do to help return them to vibrancy.
“We will get through this pandemic, and once we emerge on the other side, we can grow strongly and get that vibrancy back into our cities and town centres,” he told talkRadio.
“Once we get through this, we need to look at what can we do to make sure our cities remain vibrant places.”
Reiterating his stance, Sunak underscored that he backed Prime Minister Boris Johnson’s approach towards the pandemic.
“These are really difficult judgments, there’s no precise way to come to a mathematically correct answer,” he told BBC Radio 4. “We’re making judgments, the prime minister is in the best place to do that, I fully support the approach that he’s taken.”
Sunak on Monday warned of the damage higher interest rates could do given the huge size of Britain’s debt.
The government’s flagship wage support programme is due to expire at the end of this month and will be replaced by a less generous subsidy scheme.
Britain’s Office for Budget Responsibility forecast in July that unemployment would peak at 11.9 per cent in the final quarter of 2020 under its central economic scenario, equivalent to just over four million people, before averaging 3.5 million in 2021.
In a more negative scenario, unemployment would average four million through 2021.
While Sunak has refused to rule out tax increases, experts say he is unlikely to focus on shrinking the budget deficit quickly, given the parlous state of the economy.
The Institute for Fiscal Studies has said the time to pay for the jump in spending triggered by the pandemic is unlikely to come in 2021.
Sunak also said on Tuesday the government would stick to its so-called “triple lock” for setting increases in state pensions which could jump next year because of calculation distortions caused by the coronavirus crisis.
Asked by LBC radio whether the triple lock was safe, Sunak said: “Yes, our manifesto commitments are there and that is very much the legislative position. We care very much about pensioners and making sure they have security and that’s indeed our policy.”