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Britain will borrow a record £ 400bn this year to cover the huge impact of the coronavito pandemic, Finance Minister Rishi Sunak said Wednesday, taking the first steps to offset the largest budget deficit in the country. country in peacetime, Reuters reports according to news.ro.
The sixth largest economy in the world will contract 11.3% in 2020, the highest since the “Great Frost” of 1709. In 2021, the economy will recover less than half of that loss, Sunak said at the plan’s presentation. expenses for the following year.
“The health emergency is not over. And the economic emergency has only just begun,” said Sunak, promising more money for health, infrastructure, defense and the fight against unemployment.
The budget watchdog estimates loans will be £ 394 billion in fiscal 2020/2021, which started in April, slightly higher than forecast in August.
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At a level of 19% of GDP, the budget deficit will be nearly double the level reached after the financial crisis, which required spending restrictions for 10 years to recover.
Sunak announced a reduction in foreign aid and a wage freeze for many public sector employees.
However, Sunak would also have to resort to tax increases to compensate for this deficit.
The UK is more severely affected by the novel coronavirus than most European countries, with nearly 56,000 deaths.
The cost of coronavirus control measures is £ 280 billion this year, up from the previous estimate of around £ 200 billion.
The long-term economic impact is estimated at around 3% of GDP.
Unemployment would go from the current 4.8% to 7.5%.
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