UK markets open in 1 hour 38 minutes
  • NIKKEI 225

    -41.84 (-0.11%)

    -2.57 (-0.02%)

    -0.01 (-0.01%)

    +1.20 (+0.06%)
  • DOW

    -23.39 (-0.06%)
  • Bitcoin GBP

    +4,848.00 (+10.73%)
  • CMC Crypto 200

    0.00 (0.00%)
  • NASDAQ Composite

    -87.56 (-0.55%)
  • UK FTSE All Share

    -31.86 (-0.76%)

Chancellor Rishi Sunak warns UK economy will get 'worse before it gets better'

Britain's Chancellor of the Exchequer Rishi Sunak talks during a TV interview in London, Britain November 22, 2020. REUTERS/Simon Dawson
Britain's chancellor Rishi Sunak. Photo: REUTERS/Simon Dawson.

Chancellor Rishi Sunak has warned Britain’s economy will get “worse before it gets better,” in a sombre message about the year ahead.

Sunak used a statement in parliament to highlight recent official figures showing the economic downturn has been the worst in 300 years, costing around 800,000 jobs.

He told MPs on Monday: “While the vaccine provides hope, the economy is going to get worse before it gets better. Many people are losing their jobs, businesses are struggling, our public finances have been badly damaged and will need repair.”

He said the “road ahead will be tough,” but said firms’ efforts and the government’s £280bn ($377.4bn) “comprehensive” package of support for business and jobs would help the country get through the crisis.

READ MORE: Will Britain face higher tax and interest rates any time soon?

There are some “signs of hope” however, he added, pointing to not only the vaccine but also household savings and corporate cash buffers he said were at high levels.

Sunak also hit out at claims Britain economy was struggling more amid the pandemic than other comparable economies, saying the UK's own official data on public sector output 'flatters other countries and disadvantages us.” He suggested the UK’s performance was in line with other nations when “corrected.”

Labour’s shadow chancellor Anneliese Dodds criticised Sunak for unveiling funding for devolved administrations that had already been announced last year. She said she had also heard “almost nothing” in his speech about furlough support for recent new starters, the “broken” support provided to those self-isolating and gaps in income schemes.

The finance minister’s statement comes amid increased focus on the Treasury’s plans over the past week:

  • The former Goldman Sachs staffer hinted this week at the prospect of a “Big Bang 2.0” a reference to the financial de-regulation of the 1980s, in a bid to support the City of London.

  • He also told CityAM Britain had to show “humility” in not taking low interest rates for granted, reiterating his pledge to put the public finances on a “sustainable” footing.

  • Potential tax hikes look set to be delayed beyond the Budget in March however, with a senior government source telling the Times it was the “wrong time.” Any plans are reportedly unlikely until autumn at the earliest.

  • Sunak came under pressure from Labour leader Keir Starmer to scrap plans to allow a £1.9bn council tax “bombshell” and £20-a-week cut to benefits later this year.

  • The chancellor announced £4.6bn ($6.3bn) in new grants of up to £9,000 for businesses last Tuesday, as Britain returned to full-scale lockdown. Business groups called for more help for the self-employed, company directors and supply chains.

WATCH: Chancellor Rishi Sunak outlines new support measures for firms

READ MORE: Rishi Sunak told lockdown support for firms does not go far enough