Rishi Sunak promises ‘no return to austerity’

UK finance minister warns that Britons won’t be able to enjoy a ‘normal’ Christmas

Britain's Chancellor of the Exchequer Rishi Sunak speaks during BBC TV's The Andrew Marr Show in London. Jeff Overs/BBC

British finance minister Rishi Sunak has promised there will not be a return to austerity due to its Covid-19 response.

But he also warned the UK will not have a normal Christmas due to the pandemic.

Mr Sunak said he will announce "quite a significant" increase in funding for public services in a one-year spending plan on Wednesday.

"You will not see austerity next week," he told Sky News on Sunday. "What you will see is an increase in the government's spending on day-to-day public services, and quite a significant one, coming on the increase that we had last year."

Mr Sunak will announce the heaviest public borrowing since the Second World War after Britain suffered the biggest economic crash in over 300 years.

Economists believe Britain is on course to borrow about £400 billion pounds ($531.28 billion) this year, approaching 20 per cent of its gross domestic product, or nearly double its borrowing after the global financial crisis.

Mr Sunak said the forecasts to be published alongside his spending blueprint would show the "enormous strain" that coronavirus has put on the economy and the priority for his plan would be to fight the pandemic.

On Saturday, Britain's finance ministry announced that Mr Sunak was expected to announce a one-year package worth more than £3 billion pounds ($3.98 billion) to support the state-run National Health Service as it struggles with coronavirus.

He said the government will think about restoring public finances once the Covid-19 crisis is over, and until then will focus on fighting the pandemic.

"Once we get through this crisis we need to think more about returning to a more normal path, but as of now we are able to do what we need to do and we are able to do that at an affordable cost and use those funds to support the economy and support businesses through this crisis," he told Times Radio.

Due to the second wave of the pandemic, Mr Sunak said Britons will not be able to enjoy a normal Christmas, but said the government is looking at ways to enable families to get together.

"Frustrating as it is for all of us, Christmas is not going to be normal this year," he told Sky's Sophie Ridge on Sunday.

"But that said, the Prime Minister is, for example, looking at ways to see how families can spend time with each other."

Despite the UK's Brexit negotiations being overshadowed by the pandemic, Mr Sunak said Britain hoped to strike a trade deal with the European Union.

Asked what the effect of not having a free-trade deal in place after the transition period ends on December 31, Mr Sunak said: "It's very difficult to be precise about the near-term effects.

"But I'd agree with what the Prime Minister has said, in the short-term specifically and most immediately, it would be preferable to have a deal because it would ease things in the short term.

"But the most important impact on our economy next year is not going to be from that, it's because of coronavirus."

A deal that comes into force when the Brexit transition period ends on December 31 would be “preferable,” he added.