UK chancellor Rishi Sunak on Wednesday announced a sweeping £30bn spending package designed to insulate the country’s economy from the coronavirus fallout.
Speaking during the launch of the government’s 2020 budget, Sunak acknowledged that the virus would have a “significant impact” on the UK economy, even if it would be “temporary.”
“I am confident that our economic performance will recover,” he said.
“We will get through this together,” Sunak said. “The British people may be worried, but we are not daunted.”
Supporting ‘financial security of workers’
Noting the virus may mean that up to a fifth of the UK’s working age population may be out of work at any one time, Sunak announced a series of measures to support workers.
Statutory sick pay will now be available to all those who are advised to self-isolate due to coronavirus, even if they have not yet presented with symptoms, Sunak said.
Workers will soon also be able to receive a sick note equivalent by phoning 111, without having to go to the doctor.
The chancellor also said that, for those not entitled to statutory sick pay, it will become easier to claim government benefits.
The government will temporarily remove the minimum income floor on universal credit, and relax a series of requirements related to benefits, including the need to attend job centres.
In total, Sunak estimated that these measures could provide a boost of almost £500m to the welfare system.
The government is also providing £500m to local authorities to directly support vulnerable people in communities, Sunak said.
Support for businesses
Among the more significant measures announced by Sunak includes the abolition of business rates for firms in the retail, leisure, and hospitality sectors that have a rateable value of below £51,000.
This decision, equivalent to a £1bn tax cut, means that nearly half of all business properties in England will not pay business rates, the chancellor said.
Sunak also announced a new Coronavirus Business Interruption Loan Scheme, which will see the government guarantee 80% of bank loans of up to £1.2m to small and medium-sized businesses.
The government will set aside £2bn to cover sick pay for employees at businesses with fewer that 250 employees for up to 14 days, Sunak said, noting this would “significantly ease the burden” of the coronavirus fallout on the economy.
Sunak said that the government will also set aside £2bn to offer £3,000 cash grants to 700,000 of the country’s smallest businesses.
NHS to get ‘whatever it costs’
Sunak said the National Health Service would get the extra resources it needs to contend with the coronavirus outbreak. As part of a £5bn response package, the government will invest in vaccine research and fund the recruitment of extra staff.
“Whatever extra resources our NHS needs to cope with coronavirus, it will get,” he said.
“Whether it’s millions of pounds or billions of pounds, whatever it needs, whatever it costs, we stand behind our NHS.”
Coordinated with Bank of England
The chancellor said that the fiscal stimulus measures announced in Wednesday’s budget were coordinated with the Bank of England, which earlier on Wednesday unveiled a series of measures that were similarly designed to curb the economic impact of the outbreak.
“Our responses have been carefully designed to be complementary and to have maximum impact, consistent with our independent responsibilities,” he said.
The Bank of England slashed interest rates to record-low levels, introduced a new funding scheme for loans to businesses, and reduced a key capital buffer to 0% in order to increase the supply of credit in the economy.
Sunak told a cabinet meeting earlier that his spending package, combined with the Bank of England’s manoeuvres, would make the UK “one of the best placed economies in the world to manage the potential impact of the virus.”
The news also comes hours after new data revealed that the UK economy flatlined in January, suggesting that the bounce in growth seen following the general election has dissipated.