Rishi Sunak to outline post-Covid economy plans

Chancellor of the Exchequer Rishi Sunak holds the budget fund outside 11 Downing Street in central London before the announcement of the Spring Statement in the House of Commons on March 03, 2021 in London, England.

Victor Szymanowicz | Barcroft Media | Getty Images

LONDON – Billions of pounds of spending on healthcare and transport services are among the plans to be announced by British Chancellor of the Exchequer Rishi Sunak in his latest budget statement on Wednesday.

Sunak is due to announce the British government’s autumn budget at 12:30pm London time. In a statement released before his official announcement, Sunak said the budget would begin “work on preparing for a new post-Covid economy.” He added that the budget would help build an economy “fit for a new era of optimism.”

A number of actions due to be included have already been reported by the British press.

This includes allocating 5.9 billion pounds ($8.1 billion) to the UK’s National Health Service to help end the backlog of people waiting for tests and checks, due to the strain the coronavirus pandemic has placed on the healthcare sector.

Sunak is also set to provide £6.9 billion to cities outside London to improve public transport infrastructure.

It is also set to confirm the UK’s national living wage rise from £8.91 an hour to £9.50, which is set to take effect from 1 April.

The UK government is also expected to end a wage freeze for public sector workers, such as teachers and nurses, as part of this budget.

Other major budget spending plans include £2.6 billion to create 30,000 new school places for children with special educational needs and disabilities.

A further £1.6 billion is then set to go towards introducing new ‘T-levels’, or technical qualifications, for those aged 16-19.

“A big piece”

Callum Pickering, chief economist at Berenberg Bank, told CNBC’s “Squawk Box Europe” on Wednesday that markets should be surprised by “very little” in Wednesday’s budget.

He said Sunak’s target to increase government spending by up to 3% of UK gross domestic product would be a “significant portion compared to recent years”.

However, he added, it would be key to “focus on the details” as to where your age allocates that spending.

“If it’s focused on investment, I think a third of it will be, that should be positive for the long-term growth potential, but we have to watch things like minimum wage increases, corporate tax because if it goes too far in those trends it could cause some economic problems “.

As for whether Snack will announce any measures to help consumers deal with the recent rise in energy prices, such as a value-added tax (sales tax) cut, Pickering said that “it’s usually very difficult for advisers to adjust the economy in the short term.”

However, he said any announcements in this area would not “significantly alter consumption expectations”.

Asked about the possibility of Sunak setting aside a “rainy day fund” as part of the budget, Pickering said that kind of advertising would be a “misnomer”.

He said that implied that the UK had limits on how much it could spend and borrow in the near term, when in fact it was a matter of the chancellor’s decision whether to reduce UK debt or borrow to finance spending.

“If he put together this rainy day fund, it’s only for politics and theater, and has absolutely no economic significance in my view,” Pickering said.

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