Rishi Sunak warns UK economy faces ‘enormous strains’ with £280BILLION Covid bill ahead of Budget

2 months ago 12

BRITAIN'S public finances face "enormous strains" in the wake of the third national lockdown as data, the Chancellor has warned.

Rishi Sunak said he wanted to "level with people" about the bill for the Government's £280bn Covid support which he said will eventually have to be paid.

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Chancellor of the Exchequer Rishi Sunak has warned of the 'enormous strain' placed on the UK's finances by the pandemic

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Chancellor of the Exchequer Rishi Sunak has warned of the 'enormous strain' placed on the UK's finances by the pandemicCredit: Reuters

Low-interest rates, which have allowed the Government to borrow to pay for the Covid support costs, have left the nation's finances "exposed", Mr Sunak.

He told the Financial Times: "We now have far more debt than we used to and because interest rates... at least a month or two ago were exceptionally low, that means we remain exposed to changes in those rates.

"That's why I talk about levelling with people about the public finances and our plans to address them.

"I stood up at the beginning of this [coronavirus] thing and said I will do whatever it takes to protect the British people through this crisis and I remain committed to that.

"We went big, we went early, but there is more to come and there will be more to come in the Budget.

"But there is a challenge [in the public finances] and I want to level with people about the challenge."

There is a challenge [in the public finances] and I want to level with people about the challenge

Chancellor of the Exchequer Rishi Sunak

The budget is expected to include numerous measures to kick-start the nation's economy as lockdown eases over the coming months thanks to the vacation rollout success. 

The Chancellor will reportedly say in the Budget that "we have to be honest about the decisions we face as a country", and that such decisions must be "underpinned by fairness". 

One option believed to be under consideration is a "stealth tax" on affluent pensioners, which will see the lifetime allowance frozen for the rest of this Parliament, The Times reported. 

But Tory MPs in the northern England "Red Wall" seats won from Labour at the 2019 election warned they were ready to be an 'absolute nightmare' for the Chancellor if he hiked up taxes. 

Ex-Tory Chancellor Lord Ken Clarke said today Mr Sunak "must look at" raising VAT, national insurance and income tax but keep in place the furlough scheme.

Office for National Statistics (ONS) data showed that £316.4billion has been added to the UK's debt mountain since the onset of the pandemic

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Office for National Statistics (ONS) data showed that £316.4billion has been added to the UK's debt mountain since the onset of the pandemicCredit: ONS

Public sector net borrowing has surged since the start of the pandemic last year

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Public sector net borrowing has surged since the start of the pandemic last yearCredit: ONS

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Data revealed by the Office for National Statistics (ONS) earlier this month revealed a colossal £316.4billion has been added to the UK's debt mountain since the pandemic began this time last year — with state debt now hitting another record high,as it climbs above £2.1trillion.  

Other measures expected in the Budget include a £126 million boost for traineeships and a mortgage guarantee scheme for aspiring homeowners with small deposits.

He plans to incentivise lenders to provide mortgages to first-time buyers, and current homeowners, with just 5 per cent deposits to buy properties worth up to £600,000.

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