The U.K. government will spend billions of pounds in an effort to limit the impact of the coronavirus on the U.K. economy, the country’s finance chief said Wednesday.
The virus outbreak, which emerged in China in late 2019, has been putting pressure on all major economies by significantly reducing supply chains, hitting demand for travel, as well as fueling panic buying and stockpiling. Various economists and organizations, such as the OECD, have trimmed their global growth forecasts as a result.
Rishi Sunak, appointed finance chief last month, told the U.K. Parliament that there would be £7 billion ($9 billion) available to support the labor market and an additional £5 billion to help the health-care system.
Sunak also announced a further fiscal loosening of £18 billion to support the U.K. economy, bringing the total fiscal stimulus to £30 billion. The U.K. public body, the Office for Budget Responsibility, called it the largest budget giveaway since 1992.
LONDON, UNITED KINGDOM – FEBRUARY 14, 2020: Chancellor of the Exchequer Rishi Sunak leaves 10 Downing Street in central London after attending a first Cabinet meeting after reshuffle on 14 February, 2020 in London, England.
The “coronavirus will have a significant impact on our economy, but it will be temporary,” Sunak told lawmakers. He added that the government’s response will be “timely” and “targeted.”
As of Wednesday morning, the U.K. had registered 382 confirmed cases of coronavirus and six deaths. Some of the government’s latest measures include making sick pay available to all of those that are advised to self-isolate, even without symptoms and make loans more accessible for small and medium-sized firms. The Bank of England (BOE) announced earlier on Wednesday an emergency cut to interest rates.
Wednesday’s announcement was the first annual budget under the leadership of Prime Minister Boris Johnson. There’s been a lot of anticipation on the announcement, after a landslide victory for Johnson at a general election in December, the U.K.’s departure from the EU in January and, more recently, a change in who leads the finance ministry.
The U.K. government also unveiled plans to lower taxes for workers, freeze duties on cider, wine and fuel, and introduce a new plastic packaging tax.
“The fiscal stimulus announced by Chancellor Rishi Sunak in today’s budget should help to support economic growth given the economic headwinds created by COVID-19, but the resulting deterioration in the U.K.’s fiscal position highlights the sovereign’s ongoing difficulty in meaningfully reducing the U.K.’s gross general government debt burden from its current high levels,” Sarah Carlson, a Moody’s senior vice president, said in emailed remarks.
Meanwhile, John Hawksworth, PwC’s chief economist, said in an email that the Bank of England’s interest rate cut and its other measures to boost credit flows, alongside this budget announcement, “should go a significant way towards mitigating the economic impact of the virus in the short term.”