The United Kingdom will prioritise trying to save jobs over tax rises while the coronavirus pandemic batters the economy, though record borrowing and a $2.6 trillion debt pile cannot be sustained forever, finance minister Rishi Sunak said on Tuesday.
Prime Minister Boris Johnson is grappling with one of the worst economic hits to the UK in three centuries and Sunak has repeatedly warned that relying on such vast borrowing from the bond markets could trigger a financing crunch in the long term.
But with companies from airlines to pubs shedding hundreds of thousands of jobs and government spending soaring, Sunak – whose formal title is Chancellor of the Exchequer is looking at ways to boost state revenue.
Sunak added that the priority right now is on jobs, when asked about possible tax rises, adding that the overwhelming focus at the moment is trying to protect and support as many jobs as possible.
Asked about tax rises in a flurry of interviews, Sunak repeatedly stressed that jobs were the short-term focus but made it clear that he would have to tackle the UK’s debt mountain in the medium term.
Sunak’s emergency spending measures, including subsidies to slow a jump in unemployment, will cost about 200 billion British pounds ($260bn) this year and have already pushed public debt to more than 2 trillion British pounds ($2.60 trillion), or 100 percent of gross domestic product.
Sunak on Monday had earlier warned of the damage higher interest rates could do given the huge size of the UK’s debt.
The government’s flagship wage support programme is due to expire at the end of this month and will be replaced by a less generous subsidy scheme.
The UK’s Office for Budget Responsibility forecast in July that unemployment would peak at 11.9 percent in the final quarter of 2020 under its central economic scenario, equivalent to slightly more than four million people, before averaging 3.5 million in 2021.