Yahoo Finance Rishi Sunak: Ukraine war creating 'significant uncertainty' for UK economy
Chancellor Rishi Sunak warned on Friday that Russia’s invasion of Ukraine was creating “significant uncertainty” for the UK economy.
His comments came as UK GDP bounced back in January from the hit it took in December due to the Omicron wave, growing by 0.8%.
It is now 0.8% above its pre-pandemic peak, according to the latest figures from the Office for National Statistics (ONS).
“We have provided unprecedented support throughout the pandemic, which has put our economy in a strong position to deal with current cost of living challenges. We are continuing to help people where we can, including through over £20bn ($26bn) of support this financial year and next,” he said.
“We know that Russia’s invasion of Ukraine is creating significant economic uncertainty and we will continue to monitor its impact on the UK, but it is vital that we stand with the people of Ukraine to uphold our shared values of freedom and democracy and ensure Putin fails.
Read more: UK economy rebounds in January as Omicron disruption eases
British consumers are already facing the worst cost-of-living squeeze in decades amid soaring oil and gas prices, rising inflation, and higher interest rates and taxes.
The finance minister is now under pressure to provide more support for UK households in his Spring Statement later this month. He will publish growth and borrowing figures at the mini budget on 23 March.
Economists have said that last month’s package of a £200 energy bill rebate, repaid over five years, and a £150 council tax rebate for some households is insufficient to cushion the blow.
"At the Spring Statement, Rishi Sunak has to make a huge judgment call," Institute for Fiscal Studies director Paul Johnson said. "Will he do more to protect households from the effects of energy prices, which have risen even further in the last two weeks?
"If he doesn't, then many on moderate incomes will face the biggest hit to their living standards since at least the financial crisis. If he does, then there will be another big hit to the public finances."
Read more: European stock markets flat after selloff
He told the BBC's Today programme that Sunak will have to borrow "at least another £10bn just to cover half the blow from energy prices".
Suren Thiru, head of economics at the British Chambers of Commerce, echoed this.
"We urge the chancellor to use the upcoming spring statement to tackle the cost-of-doing-business crisis by delaying the National Insurance rise and committing to no further policy measures that will increase costs for business for the remainder of this Parliament," he said.
Watch: Cost of living: Better than expected growth for economy as Sunak faces pressure to ease squeeze from inflation
