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Budget 2020: Chancellor pumps billions into economy to combat coronavirus

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Media captionThe chancellor says his 2020 Budget offers the “largest sustained fiscal boost for nearly 30 years”

Chancellor Rishi Sunak has unveiled a £30bn package to boost the economy and get the country through the coronavirus outbreak.

He is suspending business rates for many firms in England, extending sick pay and boosting NHS funding.

In his first Budget speech, he warned of a “significant” but temporary disruption to the UK economy but vowed: “We will get through this together.”

The Bank of England has announced an emergency cut in interest rates.

Mr Sunak, who was promoted to chancellor just four weeks ago after Sajid Javid quit the government, has had to hastily re-write the government’s financial plans to deal with coronavirus.

“We are doing everything we can to keep this country and our people healthy and financially secure,” he told MPs.

Of the £30bn in extra spending, £12bn will be specifically targeted at coronavirus measures, including at least £5bn for the NHS and £7bn for business and workers.

This is on top of other spending pledges that will amount to £18bn next year, and even more in following years.

Labour leader Jeremy Corbyn said he “welcomed” many of the measures to “head off the impact” of coronavirus.

But he said the extra money for the NHS was “too little, too late” and the UK was going into the crisis with its public services “on their knees” after years of Conservative cuts.

Measures to mitigate the effect of the coronavirus outbreak include:

  • Statutory sick pay for “all those who are advised to self-isolate” even if they have not displayed symptoms
  • Business rates for shops, cinemas, restaurants and music venues in England with a rateable value below £51,000 suspended for a year
  • A £500m “hardship fund” to be given to local authorities in England to help vulnerable people in their areas
  • A “temporary coronavirus business interruption loan scheme” for banks to offer loans of up to £1.2m to support small and medium-sized businesses
  • The government will meet costs for businesses with fewer than 250 employees of providing statutory sick pay to those off work “due to coronavirus”
  • Plans to make it quicker and easier to get benefits for those on zero hours contracts
  • Benefit claimants who have been advised to stay at home will not have to physically attend job centres

The number of coronavirus cases in the UK reached 456 on Wednesday, with a sixth person confirmed to have died after contracting the virus.

The chancellor said that without accounting for the impact of coronavirus, the Office for Budget Responsibility has forecast growth of 1.1% in 2020, the slowest rate since 2009.

In other developments:

Despite speculation that he would ditch the framework on spending set by predecessor Mr Javid, Mr Sunak said his Budget is delivered “not just within the fiscal rules of the manifesto but with room to spare”.

Much of the extra money will come from borrowing, although the chancellor has scrapped a planned cut in corporation tax and scaled back a tax break for entrepreneurs, saving £6bn over the next five years.

If anyone still doesn’t get how serious coronavirus is – then today’s Budget makes it crystal clear.

This was an emergency Budget. A £30bn rescue package to save businesses from going bust and people losing jobs.

But Mr Sunak’s spending spree went a lot further than helping the country cope with coronavirus.

At times it almost felt like a Labour chancellor’s Budget as Mr Sunak poured billions into the economy – and all seemingly without breaking the government’s existing tight fiscal rules.

How was this possible?

Much will be done by a significant increase in borrowing.

But I suspect we are all going to have to go through the chancellor’s sums with a fine-toothed comb.

In other Budget measures, the chancellor announced that fuel duty would be frozen for another year.

A planned increase in spirits duty will be cancelled and duties for cider and wine drinkers will be frozen as well, but a packet of 20 cigarettes will cost 27p more.

The so-called tampon tax will be abolished, and VAT on books, newspapers, magazines and academic journals will be scrapped from 1 December.

And the chancellor pledged to more than double spending on UK government research and development by 2024.

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Media captionJeremy Corbyn: Talk of “levelling up” a “cruel joke”

The chancellor announced more than £600bn for road, rail, housing and broadband projects over five years, aimed at delivering on the Conservatives’ election promise to boost economic growth outside of London and the south-east of England.

He announced plans for Treasury offices in Scotland, Wales and Northern Ireland and a “new economic campus in the north, with over 750 staff from the Treasury”.

He also promised an additional £640m for the Scottish government, £360m for the Welsh government, £210m for the Northern Ireland executive and £240m for new city and growth deals.

Mr Sunak said he was providing £200m for local communities to build flood resilience and would double investment in flood defences.

The chancellor will deliver another Budget in the Autumn, with measures aimed at preparing the UK economy for post-Brexit trading arrangements with the EU.

Figures released by the Office for National Statistics found that the UK economy did not grow at all in January.

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