LONDON (Reuters) – Chancellor of the Exchequer Rishi Sunak delivered the first annual budget statement of Prime Minister Boris Johnson’s new government on Wednesday.
Below are highlights from the speech:
“I want to get straight to the issue most on everyone’s mind– coronavirus COVID19. I know how worried people are. Worried about their health, the health of their loved ones, their jobs, their income, their businesses, their financial security. And I know they get even more worried when they turn on their TVs and hear talk of markets collapsing and recessions coming. People want to know what’s happening, and what can be done to fix it.
“I want to set out our economic response so we bring stability and security. Let me say this: We will get through this – together. The British people may be worried, but they are not daunted. We will protect our country and our people. We will rise to this challenge.
“The challenge is this: There is likely to be a temporary disruption to our economy. On the supply side, up to a fifth of the working age population could need to be off work at any one time. And business supply chains are being disrupted around the globe. This combination of people being unable to work… …and businesses being unable to access goods… …will mean that for a period our productive capacity will shrink. There will also be an impact on the demand side of the economy, through a reduction in consumer spending.
“The right immediate policy response is to provide security and support for those who get sick or can’t work through funding our public services, and a strengthened safety net. And on the supply side, the right response is to provide a bridge for businesses, to ensure that what is a temporary impact on our productive capacity does not become permanent.
“In other words, our response will be temporary, timely and targeted. This is the right response – and at the right time. That response is closely coordinated with the Bank of England. The Governor and I have been in constant communication about the evolving situation and our responses have been carefully designed to be complementary and to have maximum impact, consistent with our independent responsibilities.
“Whatever extra resources our NHS needs to cope with COVID-19 – it will get. So, whether its research for a vaccine, recruiting thousands of returning staff, or supporting our brilliant Doctors and Nurses… …whether its millions of pounds or billions of pounds… …whatever it needs, whatever it costs, we stand behind our NHS.
“And if we expect 20% of the workforce to be unable to work at any one time, the cumulative cost would hit our small and medium sized businesses hard. So, in recognition of these exceptional circumstances, today I am taking a significant step.
“For businesses with fewer than 250 employees… …I have decided that the cost of providing Statutory Sick Pay to any employee off work due to coronavirus… …will, for up to 14 days, be met by the Government in full. That could provide over £2bn for up to 2 million businesses.
“Our manifesto promised that for shops, cinemas, restaurants, and music venues… …with a rateable value of less than £51,000… …we would increase their business rates Retail Discount to 50%.
“Today I can go further, and take the exceptional step, for this coming year, of abolishing their business rates altogether. But there are tens of thousands of other businesses in the leisure and hospitality sectors, currently not covered by this policy.
“Museums, art galleries, and theatres; Caravan parks and gyms; Small hotels and B&Bs; sports clubs, night clubs; club houses, guest houses. They would not benefit from today’s measure – but they could be some of the hardest-hit. So for this year I have decided to extend the 100% retail discount to them as well.
“Taken together, the extraordinary measures I have set out today represent £7bn to support the self-employed, businesses and vulnerable people. To support the NHS and other public services, I am also setting aside a £5bn emergency response fund – and will go further if necessary.
“Those measures are on top of plans that I will set out later in this Budget, which provide an additional fiscal loosening of £18bn to support the economy this year. That means I am announcing today, in total, a £30bn fiscal stimulus to support British people, British jobs and British businesses through this moment.
“We are investing in world class infrastructure, and to lead the world in the industries and technologies of the future. The central judgement I’m making today is to fund an additional £175bn over the next five years for our future prosperity. The OBR have said that, as a direct result of the plans I’m announcing, growth over the next two years will be 0.5 percentage points higher than it otherwise would have been.
“The GDP forecast without fully accounting for the impact of coronavirus would have led to growth of 1.1% in 2020 and 1.8% in 2021, then 1.5%, 1.3%, and 1.4% in the following years.