British budget to tackle virus fallout, aid recovery

London: British finance minister Rishi Sunak unveils his annual budget Wednesday promising measures to safeguard businesses and jobs, while tackling virus-fuelled debt as England prepares to exit its third lockdown.

Ahead of the budget statement in parliament, Prime Minister Boris Johnson’s Conservative government said it would extend its furlough scheme paying the bulk of wages for millions of private-sector workers until the end of September, five months longer than planned.

“We will continue doing whatever it takes to support the British people and businesses through this moment of crisis,” Chancellor of the Exchequer Sunak will say, according to pre-released excerpts of his speech.

“There’s now light at the end of the tunnel with a roadmap for reopening, so it’s only right that we continue to help business and individuals through the challenging months ahead – and beyond.”

Sunak will also say that once the economy is “on the way to recovery, we will need to begin fixing the public finances – and I want to be honest today about our plans to do that.

“In today’s budget we begin the work of building our future economy.”

The multi-billion-pound furlough scheme has contributed to soaring government debt, which Sunak may tackle in part by announcing a rise in corporation tax or a levy on company profits.

At 19 percent, Britain’s corporation tax rate is the nation’s lowest on record and one of the smallest in the Group of 20 bloc of wealthy nations.

The government has cut taxes during the pandemic – reducing sales tax on food, accommodation and attractions.

It has also lifted the threshold at which stamp duty is due on home purchases, helping property buyers and the construction sector.

Some or all of these measures could be extended in the budget, according to reports.

Cost of virus

Britain is the worst-hit country in Europe with more than 120,000 Covid deaths and four million cases but its economic recovery hopes have been boosted by its rapid vaccination programme that has seen millions of adults receive a jab.

The economy shrunk almost 10 percent in 2020 because of the impact of the pandemic, with activity also hampered by turmoil ahead of Britain’s eventual exit from the European Union.

Reflecting the problems, UK unemployment has shot up to a five-year high of 5.1 percent.

England’s third lockdown will start to be lifted from Monday, with the reopening of schools, followed by non-essential shops and hospitality in the coming months.

Since April 2020, or soon after the UK’s first virus lockdown, the government’s net borrowing has ballooned by #271 billion ($378 billion, 314 billion euros), according to official data.

The state has pumped out around #280 billion in support packages over the past year to fight the virus fallout, according to the Treasury.

The budget is also expected to confirm the launch of an Infrastructure Bank with #12 billion in capital and #10 billion in government guarantees.

The lender will be formed to finance private-sector projects in the green economy, focusing on areas such as carbon capture and renewable energy.