Britain’s finance minister Rishi Sunak pledged to “balance the books” and get the country’s debt levels back under control as he stressed the nation’s unemployed will not be left without hope amid the Covid-19 crisis.
Mr Sunak said he would protect Britain’s public finances over the medium term after government borrowing surged to record levels in August, in a bid to prop up the economy.
"We have a sacred responsibility to future generations to leave the public finances strong, and through careful management of our economy, this Conservative government will always balance the books," Mr Sunak said in a speech at the Conservative Party annual conference, which is taking place virtually this year.
"If instead we argue there is no limit on what we can spend, that we can simply borrow our way out of any hole, what is the point in us?"
The British government borrowed a record £35.9 billion ($46.36bn) in August as the cost of combatting Covid-19 took its toll on the country's public finances, according to government data last month.
The borrowing figure, which represents the difference between spending and tax income, was £30.5bn more than the government borrowed in August last year making it the highest amount for the month since records began in 1993. In another record, the UK has borrowed £173.7bn since the start of the fiscal year in April, outstripping the £157.7bn set in the 12 months ending March 2010.
In a speech beset with technical glitches affecting the transmission of his message, Mr Sunak pledged to safeguard jobs and businesses as he also thanked those who had placed him in the role, including his family, party colleagues and Conservative party members, and paid tribute to prime minister Boris Johnson.
Mr Johnson’s leadership has been questioned in recent months, including by some within the Conservative Party, over his handling of the coronavirus outbreak. Mr Sunak has been hailed by some as a potential future prime minister.
"Yes, it’s been difficult, challenges are part of the job, but on the big calls, in the big moments, Boris Johnson has got it right and we need that leadership," Mr Sunak said.
Mr Sunak said he would be creative in finding ways to help Britain's economy recover from its record gross domestic product slump earlier this year, stressing that there was still “hope” for those that might be facing the bleakest outlook.
He referred to the many schemes already rolled out to support those in need, including the government’s furlough programme, which is due to conclude at the end of this month.
Under the government's latest £238m Jobs Entry Targeted Support scheme, which will replace the furlough scheme, people who have been out of work for three months will receive coaching and advice to help them back into work.
Work and pensions minister Therese Coffey said the scheme will boost the prospects of more than a quarter of a million people across Britain, with her department hiring 13,500 work coaches to tutor the jobless on interview techniques and writing CVs.
Britain experienced a record decline in economic output in the second quarter of this year, suffering a GDP contraction of 19.8 per cent in the three months to June - the biggest drop since Office for National Statistics data began in 1955.
The outlook is even grimmer with Covid-19 set to exacerbate the effects of a no-deal Brexit, deepening the impact on UK GDP by 50 per cent, a new report from global law firm Baker McKenzie and economic consultancy Oxford Economics found on Monday.
A no-deal Brexit compounded by the Covid-19 pandemic could see UK GDP fall by 6 per cent and lose £134 billion annually, The Outlook for Trade after Brexit study found.
"It seems extraordinary that in the midst of the biggest economic shock to the global economy since the Second World War that the British government would consider compounding the impact on the economy of Covid-19 through consciously choosing a no deal Brexit,” said Jenny Revis, partner in the EU, Competition and Trade practice at Baker McKenzie.
“This would add enormous burdens to business at a time they are already facing genuinely unprecedented challenges.”
Economists expect unemployment to soar to 8.9 per cent in the fourth quarter of this year as wage support is withdrawn after hitting 4.1 per cent in the second quarter.
Meanwhile, UK redundancies rose at their fastest rate since 2009 this summer, with struggling companies laying off more than 150,000 staff in the second quarter of the year. Nearly 700,000 workers have been dropped from company payrolls since March, according to the government statistics.