Britain’s economy will regain its pre-pandemic size in the middle of 2022, six months earlier than previously forecast, finance minister Rishi Sunak said on Wednesday, while announcing an extension of emergency aid to get it through its lockdown.
The economy will remain three per cent smaller in five years’ time than it would have been without the damage brought by the coronavirus crisis and extra support was needed now as the country remains under coronavirus restrictions, he said.
Among the new support measures was a five-month extension of his huge jobs rescue plan and more help for the self-employed, the continuation of an emergency increase in welfare payments, and an extension of a VAT cut for the hospitality sector.
“First, we will continue doing whatever it takes to support the British people and businesses through this moment of crisis,” Sunak told parliament.
“Second, once we are 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. And, third, in today’s Budget we begin the work of building our future economy.”
Announcing forecasts by the Office for Budgetary Responsibility (OBR), Sunak said the economy was likely to grow by 4 per cent in 2021, slower than a forecast of 5.5 per cent made in November.
Looking further ahead, the OBR forecast gross domestic product would grow 7.3 per cent, 1.7 per cent and 1.6 per cent in 2022, 2023 and 2024 respectively. In November, the OBR had forecast growth in those years of 6.6 per cent, 2.3 per cent and 1.7 per cent.
Sunak promised to do “whatever it takes”, including a five-month extension of a huge jobs rescue plan, to steer the economy through what he hopes will be the final months of pandemic restrictions.
He has already racked up Britain’s highest borrowing since World War Two and was due to say that the task of fixing the public finances will only begin once a recovery is in sight, according to excerpts of his speech released on Tuesday.