INTERNATIONAL - U.K. finance minister Rishi Sunak pledged a £30 billion ($39 billion) stimulus package as he seeks to prepare the British economy to fight the potentially devastating impact of coronavirus.
After the Bank of England dramatically cut interest rates on Wednesday morning, the chancellor of the exchequer began the government’s coordinated response, as policy makers seek to tackle the greatest threat to the world economy for more than a decade.
In his Budget statement to Parliament, Sunak promised a huge fiscal stimulus totaling 30 billion pounds “to support British people, British jobs and British businesses through this moment.”
“I know how worried people are,” Sunak told the House of Commons on Wednesday. “We are doing everything we can to keep this country, and our people, healthy and financially secure.”
Sunak said he was in “constant communication” with the Bank of England over the “coordinated” and “comprehensive” response to the virus.
The chancellor set out his multi-billion pound three-point plan:
- The National Health Service will get “whatever it needs, whatever it costs,” with a 5 billion-pound emergency response fund immediately for public services
- People will get financial support if they need it to cope with the virus, with statutory sick pay for everyone who’s been told to self-isolate, and more generous welfare rules
- Supporting businesses: government to refund sick pay bills for 14 days in full, for 2 million companies with fewer than 250 employees.
The coordinated response from the U.K. central bank and government underlines the scale of the threat to the global economy from the outbreak. The Italian government pledged $28.3 billion to combat the epidemic, while the European Central Bank warned of a 2008-style crisis and German Chancellor Angela Merkel pledged to do “whatever is necessary” to weather the economic storm.
For Sunak, 39, it is a baptism of fire. He has been in the most senior finance minister’s post for only 27 days, after his predecessor quit following a disastrous clash with Johnson. His statement comes at a critical time for the British economy, which unexpectedly stalled in January, even before any impact of the virus could be felt.
Businesses fear the impact of the virus could be catastrophic, with as many as one in five workers potentially being forced to stay at home sick, according to officials.
Wednesday’s budget was meant to be the moment Johnson’s government unveiled its great vision. After winning a large majority in last December’s election, his Conservative administration has set out to reorder the U.K. economy, reviving regions of the country that have been “left behind” by faster growth in London and the south.
Instead, the details of Johnson’s most ambitious plans have been postponed as the emergency response to the virus crisis dominates the government’s focus.
Even so, Sunak is insisting his statement delivers on the key promises the Tories made to austerity-weary voters last year. He’s unveiling record 600 billion pound spending on infrastructure across the country, targeted on roads, railways, housing, digital connectivity and research and development. Tax cuts and a boost in spending for the National Health Service are also expected.