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Rishi Sunak to outline post-Covid economy plans


Rishi Sunak, Chancellor of Exchequer, holds the Budget Box outside 11 Downing Street, central London in preparation for the Spring Statement announcement in the House of Commons, 03/03/2021, London, England.

Wiktor Szymanowicz | Barcroft Media | Getty Images

LONDON — Multi-billion pound spending on health care services and transport are among the plans British Finance Minister Rishi Sunak is set to announce in his latest budget statement on Wednesday.

Sunak will be announcing the U.K. government’s fall budget at 12:20 p.m. London. In statementSunak stated that the budget would begin “the work to prepare for a new economic system post-Covid.” Sunak stated that the budget will help to build an economic “fit for a fresh age of optimism”. 

British media have reported on a number of proposed measures.

It includes allocating £5.9 billion ($8.1 billion) to the U.K.’s National Health ServiceTo clear up the waiting list of patients who have been waiting to be tested and scanned due to the stress caused by the coronavirus epidemic.

Sunak also has his hand £6.9 billion to cities outside of LondonImprove their public transport infrastructure

He is also due to confirm a rise in the U.K.’s national living wage from £8.91 per hour to £9.50, which is set to come into effect from April 1.

As part of the budget, it is expected that the U.K. government will also lift its pay freeze for public sector employees, like teachers and nurses.

Other key budgetary spending plans include £2.6 billion to create 30,000 new school places for children with special educational needs and disabilities.

Another £1.6 billion is then due to be put toward rolling out new “T-levels,” or technical qualifications, for 16-19 year-olds.

‘Significant chunk’

Kallum Pickering is a senior economist at Berenberg Bank. He spoke to CNBC’s “Squawk Box EuropeOn Wednesday, the markets shouldn’t be shocked by Wednesday’s budget.

Sunak’s plan to boost government spending by 3% of U.K. GDP would represent a “significant chunk” relative to previous years, said he.

But he said it was crucial to be “focused on the details” about Sunak’s spending.

Pickering said, “If it’s concentrated on investment, approximately a third thereof will be, which should be good for long-run growth potential. But we should watch out for minimum wage hikes and corporate taxes, because if he moves too far in either of those areas that could lead to some economic troubles.”

Sunak is yet to announce whether any consumer-friendly measures will be announced. recent surge in energy pricesPickering stated that it is “often very difficult for chancellors” to adjust the economy quickly, including a cut in VAT (sales tax).

However, any announcements made in this area would not significantly change the “consumer outlook.”

Pickering was asked about whether Sunak might set aside a “rainy-day fund” in the budget. Pickering replied that such an announcement would not be accurate.

This implied that there was a limit on the U.K.’s ability to spend or borrow short-term, while it is in fact a matter of the chancellor making the decision about whether to decrease the U.K. debt or to borrow funds to fund spending.

Pickering stated that if he creates this rainy-day fund it is purely for political purposes. It has no economic significance whatsoever to me.