UK unveils more virus spending despite soaring debt

Britain unveiled billions of pounds in state spending Wednesday despite soaring debt, including pay rises for nurses to support the virus-ravaged economy as the nation embarks on its post-Brexit future.

Announcing that the UK economy was set to contract by 11.3 per cent this year, the worst performance in more than three centuries, finance minister Rishi Sunak told parliament that investment was vital to aid the recovery.

The economy, which tanked into a historic recession owing to pandemic fallout, was forecast to rebound by 5.5 per cent next year and by 6.6 per cent in 2022.

“Our health emergency is not yet over and our economic emergency has only just begun,” Sunak commented as he unveiled the latest spending review of Prime Minister Boris Johnson’s government.

“So our immediate priority is to protect people’s lives and livelihoods,” added the chancellor of the exchequer.

With public debt soaring owing to Wednesday’s spending commitments and the huge sums paid out to support the UK economy during the pandemic, Sunak said “sticking rigidly” to the UK’s overseas aid budget was “difficult to justify to the British people”.

He said the aid budget would be reduced to 0.5 per cent of gross national income, and return to 0.7 per cent “when the fiscal situation allows”.

Sunak’s updates came a week before England ends a second lockdown aimed at curbing a fresh wave of coronavirus infections.

The updates were presented also with Britain yet to strike a post-Brexit trade deal with the European Union ahead of a transition period ending December 31.

Sunak confirmed that the National Health Service would receive a boost totalling o3.0 billion ($3.9 billion, 3.3 billion euros).

The military is to receive billions of pounds extra over four years in the biggest such investment since the end of the Cold War, as Britain positions itself for its post-EU future.

In total, the government plans to spend o55 billion on public services linked to coronavirus next year, it announced Wednesday.

‘Economic emergency’

Recent official data shows UK state debt has exceeded o2.0 trillion for the first time.

Britain has been one of the worst-affected countries in the world in the outbreak, registering almost 56,000 deaths.

At the start of November, England effectively shut down for the second time this year to curb spiking virus infections and deaths.

To help cushion the blow, the government recently rolled out a multi-billion-pound support package by extending its furlough jobs scheme until the end of March 2021.

“This is an economic emergency — and that is why we have taken and continue to take extraordinary measures to protect people’s jobs and incomes,” Sunak added Wednesday.

He said that while the government would give pay rises to more than one million nurses, doctors and others working for the state health service, the offer could not be extended to other public-sector workers.

“Coronavirus has deepened the disparity between public and private sector wages,” Sunak said.

“And unlike workers in the private sector who have lost jobs, been furloughed, seen wages cut and hours reduced — the public sector has not.

“In such a difficult context… especially for those people working in sectors like retail, hospitality and leisure, I cannot justify a significant across-the-board pay increase for all public sector workers,” added the finance minister.

The government’s mammoth package is being coordinated with the Bank of England, which is pumping huge amounts of cash into the economy to support businesses and has slashed its interest rate to a record-low 0.1 per cent.

(Source: BSS)