RISHI SUNAK has defended his ‘spend, spend, spend’ Budget as prudent and insisted the priority was to tackle the coronavirus outbreak.
His £30billion package has been welcomed by analysts but the chancellor faced fears that a shrinking economy could cost every family at least £600 a year even before the virus crisis grips.
In his first Budget after just a month in the job, Mr Sunak declared he would spend ‘whatever it takes’ to tackle the outbreak.
His commitments could add as much as £100billion to public borrowing by 2024, according to the Office for Budget Responsibility, and critics warned of the potential losses to household incomes, as well as possible tax hikes and spending cuts ahead.
The new measures include boosting sick pay support for workers, including the self-employed, and a £5billion emergency response fund for the NHS and other public services.
Mr Sunak insisted yesterday he was taking a ‘prudent’ approach to the nation’s finances but insisted: ‘I make absolutely no apology for responding in the short term to the immediate threat we face from coronavirus.’
Statutory sick pay will be extended to all of those eligible and asked to self-isolate, even if they are not showing symptoms. The government will meet the cost of providing SSP for 14 days for businesses with fewer than 250 employees, while business rates will be scrapped for thousands of small firms over the next year.
Mr Sunak also raised the National Insurance threshold from £8,632 to £9,500, which he said would be worth an extra £100 apiece each year for 31million workers. However there were warnings over GDP by living standards think-tank the Resolution Foundation, which called the slump in the economic growth forecast ‘grim’.
Chief executive Torsten Bell said: ‘Once we take the economic impact of coronavirus into account, this is the weakest official growth outlook on record. Having finally returned to peak pay this year, real wage growth is set to weaken every year of the forecast period.’
The Institute for Fiscal Studies welcomed the Budget’s ‘timely, targeted and temporary’ coronavirus measures but director Paul Johnson cautioned: ‘It remains to be seen whether it will be enough to support public services, support the vulnerable and insulate the economy from long-term effects.’
Labour’s shadow chancellor John McDonnell accused Mr Sunak of ‘sowing the seeds of disappointment’ while acting too late to support the NHS and other public services.