Sunak may announce more spending with a focus on ‘health system’

• Pramod Thomas
• 25 November, 2020

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By: Pramod Thomas

BRITISH finance minister Rishi Sunak may announce more spending on Wednesday(25) against the backdrop of the heaviest public borrowing since World War Two.

He has already pledged over  £200 billion ($267 billion) to fight the Covid-19 crisis, will free up more cash

Sunak will announce extra investment to ease a backlog in the health system, counter a surge in unemployment and build new infrastructure in a one-year Spending Review that he is due to deliver to parliament at around 1230 GMT.

With Britain’s full exit from the EU approaching on Dec. 31 – and no new trade agreement yet secured – Sunak is likely to announce more spending on customs operations and possibly replacement subsidies for farmers.

But borrowing forecasts accompanying his blueprint are likely to dwarf the spending plans.

Britain is on course for a record economic crash this year – the Bank of England forecasts an 11 per cent slump – and its recovery has been weaker than those of other big economies.

Its budget deficit is expected to surge to about 20 per cent of economic output, almost double its level after the global financial crisis which took nearly a decade of unpopular spending cuts to work down.

Sunak says now is not the time to rein in spending or raise taxes to address the deficit.

Britain’s economy is set to go back into contraction in the last three months of the year, albeit by less than in the spring, after a second wave of Covid-19 prompted new shutdowns of businesses across the UK.

But Sunak is expected to signal his first moves to offset at least some of his spending by announcing a freeze on public sector pay and a reduction in Britain’s foreign aid budget.

In a newspaper interview at the weekend, Sunak said he would start to “look forward” in the spring towards fixing the deficit, if vaccines and infection tracking turn the tide of the pandemic.

But Paul Johnson, director of the Institute for Fiscal Studies think tank, said the wide range of demands on Sunak in the coming years meant spending was only likely to rise.