The United kingdom is set to
borrow £394 billion to deal with the economic impact of the coronavirus
pandemic.
This is the highest ever amount
the UK will borrow in its peacetime history.
While presenting the 2020
spending review at the UK house of commons on Wednesday, Rishi Sunak, UK
chancellor to the exchequer, the country’s national treasury, said the pandemic
will result in the shrinking of the UK economy by 11.3 percent and also lead to
a rise in unemployment figures.
He said the office for budget
responsibility (OBR) expects growth of 5.5 percent in 2021 and 6.6 percent the
following year.
The chancellor said the UK will
provide increased pay for healthcare workers in the country and low-income
earners to cushion effect of the coronavirus.
“The UK is forcast to borrow a
total of £394 billion this year equivalent to 19 percent of GDP, the highest
recorded level of borrowing in our peacetime history,” he said.
“We will provide a pay rise to
over a million doctors, nurses and others working in the NHS.
“We cannot protect every job.
Despite the extraordinary support we have provided, the OBR expect unemployment
to rise to a peak in the second quarter of next year of 7.5 percent, 2.6
million people.
“The OBR forecasts the economy
will contract this year by 11.3%, the largest fall in output for more than 300
years. As the restrictions are eased, we expect the economy to start recovering
growing by 5.5 percent next year, 6.6 percent in 2022, then 2.3, 1.7 and 1.8
percent in the following years.
“Even with growth returning, our
economic output is not expected to return to pre-crisis level until the fourth
quarter of 2022. The economic damage is likely to be lasting. In 2025, the
economy will by three times smaller than expected.”
The UK has recorded over 1.5
million cases of COVID-19, with more then 55,000 deaths.
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