Budget will ease coronavirus damage to economy, says Chancellor Rishi Sunak

The Budget will give the NHS and business ‘whatever it needs’ to stop coronavirus wreaking permanent damage to the economy, the Chancellor vowed today.

Rishi Sunak warned that UK plc is set for a ‘shock’ as the killer disease spreads around the globe.

But he insisted the effects would be ‘temporary’ and Britain is ‘well prepared’ to cope with the situation. 

He made clear his first financial package this week will focus on supporting businesses, and pledged to give the NHS would get the resources to deal with a feared mass impact in this country.

But he flatly dismissed the idea that the crisis would result in the Brexit transition period being extended beyond December 31. 

Mr Sunak, who has been in office for less than a month, said he was ‘not daunted’ by the challenge of protecting the UK’s finances from the effects of Covid-19. 

Mr Sunak told Sky News’ Sophy Ridge on Sunday programme: ‘I’m working hard with the team to make sure that we have the interventions required to help anyone through a difficult period first and foremost, supporting public services but also helping vulnerable people and also businesses to get through anything that might be coming our way,’ he said.

‘We stand ready to give the NHS whatever it needs.’  

Asked whether the ‘standstill’ post-Brexit period could be extended to prevent more upheaval, Mr Sunak said: ‘No, I think very clearly the Prime Minister has been clear that we don’t want to extend the transition period… 

‘I passionately believe in making sure that we support business but when it comes to new trading relationships, that work has been going on for quite a while.’ 

The comments came as Scottish First Minister Nicola Sturgeon admitted it is now a question of ‘when’ the UK will face a mass coronavirus outbreak.

Ms Sturgeon stressed that most people who contract the illness will only suffer ‘mild’ symptoms.

But she accepted that the government was preparing for a 100,000 deaths. Asked reports of the figure in the Sunday Times, Ms Sturgeon told Sky News: ‘We’re looking at the scientific worst case scenarios right now… these kind of figures are very much worst case scenarios.’

She added that the government was looking to mitigate the impact on vulnerable people.

‘These kind of figures are broadly in terms of the worst case scenarios that we face,’ she said.

‘But they are not forecasts. They are not forecasts of what will necessarily happen.’

Ms Sturgeon said it was ‘inevitable’ that the health service will need more resources. 

On BBC One’s Andrew Marr Show, Mr Sunak repeatedly dodged saying whether he would tear up the economic rules put in place by predecessor Sajid Javid. 

They include not borrowing to fund day-to–day investment, and being on track to balance the books within three years. 

‘I believe very much in the importance of fiscal responsibility, about responsible management of our public finances,’ he said. 

‘And as I’ve made the point before, it’s because there’s been very strong management of public finances over the last 10 years by successive Conservative chancellors who have made some difficult decisions that means I can sit here today and say I will invest what it takes to get us through this because our public finances are in a good spot.’ 

But asked if Government debt will be lower at the end of this parliament, Mr Sunak said: ‘I can’t comment on the exact forecast until Wednesday.’ He also declined to say whether the Government will borrow to fund day-to-day spending, or whether he could guarantee to balance the budget within three years. 

Mr Sunak told the Sunday Telegraph, the country is ‘well prepared’ and would ’emerge on the other side stronger’.

Outlining his plan to help businesses cope with the virus, the MP for Richmond in Yorkshire said: ‘You have to look at the nature of what the economic impact might be, so that we can design an appropriate response.

‘The main issue is lots of people might be ill, and therefore not be able to be at work. And that impacts the productive capacity of your economy if you’ve got a manufacturing plant and they can’t make their widgets.’ 

He added: ‘We need to look at what are the interventions that we need to help bridge a difficult period. That’s where we might look at some targeted options to help ease the strain on cash flows for a certain period to help them get through to the other side.

‘Obviously, alongside the supply shock there will likely be an impact on demand if people are at home.’ 

Mr Sunak said he was ‘looking at’ objections to transaction taxes such as stamp duty, an apparent hint that the levy could be changed in future budgets.

And he said that he wanted ‘lower rates of tax’ during his time in office.

Elsewhere, the Treasury said Mr Sunak is set to double funding for flood defences to £5.2 billion in Wednesday’s Budget.

The investment will help to build 2,000 new flood and coastal defence schemes and better protect 336,000 properties in England over the next six years.

He said communities in Britain have been ‘hit hard’ by severe flooding this winter, saying it is ‘right that we invest to protect towns, families, and homes across the UK’.

The funding – which doubles the £2.6 billion spent on flood defences between 2015 and 2021 – is expected to be targeted in every region, and will be available from next April.

Among other measures expected to be announced are:

• A £643million package of investment to help rough sleepers off the streets and support them get their lives back on track. 
• Up to £100million more per year will go towards the fight against ‘dirty money’, with a new levy on firms regulated for anti-money laundering. 
• Millions more for state-of-the-art football pitches in hard-hit communities.

The Chancellor said: ‘This Budget will be about delivering on our promises to the British people, and levelling up all parts of the UK is a big part of that.

‘Communities up and down Britain have been hit hard by the floods this winter – so it is right that we invest to protect towns, families, and homes across the UK.’

The UK has been battered by a string of storms over recent months, leading to severe flooding across the UK – particularly in Wales, south Yorkshire and the Midlands.

The Chancellor is also set to announce a £120million winter defence repair fund to fix assets damaged in the recent storms as quickly as possible when he delivers his first Budget.

Last month, the Government pledged a package of support to help flood-hit households – including financial hardship payments, council tax and business rates relief, and business recovery grants.