A day after unveiling a £30billion spending splurge in his mini-budget, the Chancellor appealed to the public to dine out and enjoy themselves to help get the economy motoring again after months of lockdown. He said having “people out and about, back in restaurants, moving house, renovating homes, installing energy efficiency measures in homes” would help boost the economy. But the Chancellor acknowledged the Treasury will face tough long-term decisions over tax to pay for the colossal spree and confessed to being “anxious” about the prospect of a deep recession.
His remarks followed warnings that the Government’s budget deficit could soar to over an eye-watering £300billion by the end of the year.
“We’ve moved through the acute phase of the crisis where large swathes of the economy were closed.
“We’re now fortunately able to safely reopen parts of our economy, that’s the most important thing that we can do to get things going,” the Chancellor said yesterday during a round of media interviews to defend the big-spending measures in Wednesday’s summer financial statement.
“But we won’t know the exact shape of that recovery for a little while – how will people respond to the new freedoms of being able to go out and about again. We have to rediscover behaviours that we’ve essentially unlearned over the last few months.
“But unless activity returns to normal, those jobs are at risk of going which is why we acted in the way that we did.”
Measures in his mini-budget included a temporary stamp duty cut, a £9billion bonus scheme to encourage firms to re-employ furloughed staff, a VAT cut for hospitality and tourism businesses and vouchers worth up to £10 for households to dine out.
The £30billion price tag for the package – designed to boost the economy – came on top of £160billion already committed by the Government for emergency measures in the coronavirus crisis.
Mr Sunak warned that not all furloughed workers will get their jobs back despite his offer of £1,000 to firms for every previously furloughed member of staff still in a job by January.
“I’ve been very clear that we are not going to be able to protect every single job and it would be wrong of me to pretend otherwise.
“There are going to be difficult times ahead and there are forecasts for people predicting significant levels of unemployment. That weighs very heavily on me.”
Mr Sunak said more than a million businesses had benefited from Government financial support during the crisis, but apologised to those who had not been reached.
“Over a million businesses have benefited, for example from the furlough scheme a million businesses have accessed some of our loans, almost a million businesses have got access to cash grants or business rates holidays.
“So clearly the scale of what we’re doing is reaching a lot of people. Is it going to reach absolutely every single person and every single company in exactly the way they would like? I’m sure not and I can only apologise for that,” he said.
He also apologised to self-employed workers who felt left behind by the support schemes.
“Does everyone feel that they’ve been helped in the way that they would like to have been? Of course not and I can only apologise for that.”
Labour yesterday accused the Chancellor of taking a “one-size fits all” approach. Shadow chancellor Anneliese Dodds said: “My major concern with the way Government is proceeding now is that they’re withdrawing the job retention scheme and the self-employed scheme at the same time, right across the whole economy.
“We all know that some sectors are being much more strongly impacted than others, the Chancellor’s continuing with that one-sized fits all approach, we would urge him to look again at this, we have been continuously.”
She added: “I do find it a little peculiar that we now have this bonus that will be paid to all employers regardless of whether their business are back operating up to full capacity or not.
“We really need to have targeted support, this is a crisis like no other where the impact is very strongly sectoral, we should have had a more sectoral approach from the Chancellor.”