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UK announces ‘largest giveaway budget’ for nearly 30 years to battle COVID-19

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By Alasdair Sandford
Britain's Chancellor of the Exchequer Rishi Sunak outside No 11 Downing Street with the traditional red box containing the budget speech, March 11, 2020.
Britain's Chancellor of the Exchequer Rishi Sunak outside No 11 Downing Street with the traditional red box containing the budget speech, March 11, 2020.   -   Copyright  Kirsty Wigglesworth/Copyright 2020 The Associated Press. All rights reserved

The British government has announced measures in its annual Budget worth £12 billion (€13.7 billion) to help the economy deal with the coronavirus outbreak.

The package is earmarked for public services, people and businesses whose finances have been hit by COVID-19. It was unveiled in parliament by the UK’s new Chancellor of the Exchequer (finance minister) Rishi Sunak, part of an overall £30 billion (€34.3 billion) stimulus plan to boost the economy.

The large amount of money pledged firmly closes the door on a decade of austerity under Britain’s Conservative – or Conservative-led – governments. Independent economic forecasters say it represents the UK’s biggest spending boost for over a quarter of a century.

Sunak – in his post for under a month since Sajid Javid’s resignation – pledged that the UK’s National Health Service (NHS) would get whatever resources it needed to cope with the crisis. The number of coronavirus cases in the country stood at 456 on Wednesday and six people have died from the disease.

Among the other key measures are:

  • Statutory sick pay for anyone diagnosed with COVID-19 or who is advised to “self-isolate”
  • Other benefits are to be made more accessible and easier to claim
  • A law is to be brought forward to enable small and medium-sized businesses to reclaim for sickness absence
  • Discounts on business rates are to be increased
  • Local authorities will get more money to help small businesses, vulnerable people and households
  • A temporary scheme will launch soon to help businesses get bank loans, with a government-backed guarantee for lenders
  • Government help for businesses and self-employed people in “financial distress” or with tax problems

The Budget builds on spending promises made by Boris Johnson’s new Conservative government, which resoundingly won a general election last December, in part due to support from voters in poorer areas who switched from their traditional backing for the rival Labour Party.

The Office for Budget Responsibility (OBR), whose forecasts form the basis for government spending plans, described it as the “largest Budget giveaway since 1992”.

“The Government has proposed the largest sustained fiscal loosening since the pre-election Budget of March 1992,” the OBR said in its overview.

The plans are expected to be financed by increased borrowing. Earlier on Wednesday, the Bank of England announced an emergency cut in interest rates.

Public sector borrowing over the next four years would now rise to £290.6 billion (€331.5 billion), compared to a forecast in December of £194.1 (€221.5), the OBR said.

“The government’s boast of the biggest investment since the 1950s is frankly a sleight of hand,” said opposition Labour leader Jeremy Corbyn, accusing it of having done huge damage via austerity.

The UK’s only Green MP Caroline Lucas said the Budget had failed to deliver on a promise to prioritise the climate and the environment, by imposing a fuel duty freeze and pledging investment for more roads.

On Wednesday the World Health Organisation declared the VOCI-19 virus a pandemic and urged countries across the world to find, isolate, test and treat every case.