Rishi Sunak : UK Economy Facing Emergency With Largest Fall In Output For 300 Years And GDP Contracting By 11.3% in 2020 Rishi Sunak (Picture via The Spectator)

British Finance Minister Rishi Sunak has said the government will end up borrowing a peacetime record of almost £400bn this year ( or 19% of the country's GDP) as it seeks to fight the worst recession in more than 300 years.

Appearing before MPs, the Chancellor of the Exchequer said that while the pandemic induced health emergency was not yet over, the economic emergency was only just beginning.

Citing forecasts from the government’s tax and spending watchdog OBR (Office for Budget Responsibility) in his address, Sunak said the economy is set to contract by 11.3% this year, calling it the largest fall in output for 300 years. The economy is forecast to recover by 5.5% in 2021.

Even as growth is forecast to return in the coming years, economic output would not go back to pre-crisis levels until the fourth quarter of 2022, and the economic damage from COVID-19 was likely to be lasting. OBR added that the lasting damage caused by the pandemic would be exacerbated by a further 2% hit to growth in the event of a ‘no-deal’ Brexit.

Sunak said the UK faced an “economic emergency” warranting a cut in international aid and a public sector pay freeze for millions, with an exemption for NHS staff and workers earning less than £24,000 per year. Sunak said that 2.1 million lowest paid workers would get a £250 (€280) minimum rise.

Unemployment is projected to rise to 7.5%, Sunak said, before falling to 4.4% by the end of 2024.

An Appeal...

Dear Reader,

As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.

Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.

We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.

Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.

Become A Patron
Become A Subscriber
Advertisement