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UK Budget: Chancellor dedicates £30bn to limit 'significant impact' of coronavirus on economy

By Ramla Soni

In total the government is setting aside £30bn in fiscal stimulus to support the UK through the virus outbreak

UK chancellor Rishi Sunak opened his first Budget speech since entering the Treasury last month with a statement on coronavirus and how the country will tackle the epidemic and its impact on the economy.

He said: “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.”

He expects coronavirus to have a "significant impact" on the UK economy, but it “will be temporary," he added.

The Budget followed an emergency rate cut by the Bank of England from 0.75 per cent to 0.25 per cent in response the coronavirus.

The chancellor told the cabinet that the coronavirus was “front and centre in our minds” in writing the Budget and the measures he announced “will make the UK one of the best-placed economies in the world to manage the potential impact of the virus”.

Sunak said the bank and the government would take a two-pronged approach, with the government’s response using “fiscal action to support public services, households and business”.

The government will also give the NHS "whatever extra resources" it needs during the coronavirus outbreak, Sunak added.

Additionally, a coronavirus loan scheme is to be introduced to cover the cost of salaries and bills will offer loans of up to £1.2m ($1.5m, €1.3m)to support small- and medium-sized businesses.

The chancellor also spoke about the implementation of statutory sick pay (SSP) to support people isolating themselves because of coronavirus.

SSP is paid by employers, so self-employed workers are not eligible, but agency workers are. It is set at £94.25 a week.

In total the government is setting aside £30bn fiscal stimulus to support “British people, British jobs and British businesses through this moment”, Sunak said.

This includes £7bn to support the self-employed, businesses and vulnerable people, a £5bn emergency response fund to support the NHS and other public services and an additional fiscal loosening of £18bn to support the economy this year.

The National Insurance threshold will also be raised from £8,632 to £9,500 next month Sunak announced, saving a typical employee £104 a year.

At the same time Sunak said the Office for Budget Responsibility (OBR) expects growth to be 0.5 per cent higher over the next two years as a result of the packages.

"The GDP forecast without fully accounting for the impact of coronavirus would have led to growth of 1.1 per cent in 2020 and 1.8 per cent in 2021, then 1.5 per cent, 1.3 per cent, and 1.4 per cent in the following years," he stated.

The UK government will also boost spending on infrastructure.

"We’re going to build broadband, railway, roads”, Sunak said, as he promised £5bn to get gigabit-capable broadband into the remotest places and £510m of new investment into the shared rural mobile phone network. This would mean 4G coverage will reach 95 per cent of the country in the next five years, he said.

FURTHER READING: Bank of England cuts rates amid Covid-19 uncertainty

FURTHER READING: Chancellor Sajid Javid to give his first UK Budget in November

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