LONDON (Reuters) – British finance minister Rishi Sunak said on Monday he would protect the public finances after a surge in spending, and also defended Prime Minister Boris Johnson whose handling of the coronavirus crisis has come under fire.
Britain is on course for its biggest budget deficit since World War Two, hit by around 200 billion pounds ($259 billion) of emergency spending and an expected slump in tax revenues after the economy shrank by 20% in the second quarter.
Sunak used his speech to the annual conference of his Conservative Party – usually a high-profile event but delivered online this year due to the pandemic – to promise he would fix the public finances in the medium term.
“We have a sacred responsibility to future generations to leave the public finances strong, and through careful management of our economy, this Conservative government will always balance the books,” he said.
“If instead we argue there is no limit on what we can spend, that we can simply borrow our way out of any hole, what is the point in us?”
Sunak, who has been tipped in the British media as the next prime minister after his decisive action early in the crisis, paid tribute to Johnson – whose leadership has been questioned, including by some within the Conservative Party.
“Yes, it’s been difficult, challenges are part of the job, but on the big calls, in the big moments, Boris Johnson has got it right and we need that leadership,” Sunak said.
He said he would be creative in finding ways to help the world’s sixth-biggest economy recover from its record slump.
“Even if this moment is more difficult than any you have ever faced, even if it feels like there is no hope, I am telling you that there is, and that the overwhelming might of the British state will be placed at your service,” he said.
But he repeated his warning that he would not be able to protect all jobs.
“We are now seeing our economy go through changes as a result of coronavirus that can’t be ignored,” he said.
Sunak announced last month that he would replace his huge subsidy programme for furloughed workers, which expires on Oct. 31, with a less generous job support programme. Economists expect unemployment to rise sharply in the coming months.
“I have always said I couldn’t protect every job or every business. No chancellor could,” he said.
($1 = 0.7729 pounds)
Additional reporting by Andy Bruce; Writing by William Schomberg; Editing by Guy Faulconbridge and Alex Richardson