UK will require 100 billion pound push out of Sunak’s budget, think tank says
LONDON (UK) – British finance minister Rishi Sunak should follow the steps taken by the United States by announcing a 100 billion pound stimulus push in next week’s budget to trigger an economic recovery from the COVID-19 pandemic, a think tank said on Thursday.
Sunak, who is due to announce a new budget plan on March 3, has already set aside more than 280 billion pounds ($395 billion), as part of coronavirus spending and tax cuts, thereby pushing Britain’s borrowing to the highest level since World War Two.
The Resolution Foundation said Sunak should extend emergency support for businesses and workers. It also said it would announce a new round of stimulus measures to reduce unemployment, give a boost to green investment and help retailers.
Together, these measures would be equal to an additional 100 billion pounds of stimulus, a smaller version of the massive recovery plan declared by new US President Joe Biden.
James Smith, research director at the Resolution Foundation, said, “While in the US, debate has focused on President Biden’s $1.9 trillion stimulus plan, the UK debate has got stuck on how to withdraw support.”
“Instead, the Chancellor should combine extending existing support with fresh stimulus once restrictions are lifted to deliver a 100 billion pound plan to boost Britain’s recovery.”
The Resolution Foundation had predicted last year that Sunak would need to reverse plans to phase out the furlough scheme, and said he should commit 27 billion pounds so as to strike a retraining and job support package to cut down unemployment.
It also made a recommendation of making permanent a 20 pound weekly increase to the Universal Credit benefit as aid for the low paid and unemployed, an 18 billion pound green investment programme, and 30 billion pounds extending existing emergency support for workers and firms.
The Resolution Foundation said its proposals amounted to a stimulus plan equivalent to around 5% of British economic output, which includes a further 9 billion pounds for a voucher scheme, aimed to boost Britain’s high streets and retailers.
While smaller than the Biden plan, which comes to 9% of US output, the Resolution Foundation said this showed that Sunak has already provided significant support.
Tax rises will be required to pay for the extra support at a later date, the think tank said.
“At that point around 30 billion pounds of consolidation will be needed to balance the current budget – and build fiscal policy space for future recessions,” the Resolution Foundation said.