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The Treasury has announced a one-year spending review to “fully focus” on addressing the coronavirus crisis, as official figures show that debt records continue to be crushed.
The government said it would have liked to outline spending plans for the rest of the current parliament, as originally planned.
But a statement on the U-turn said the chancellor and prime minister had decided on a more specific approach given the renewed threat of the pandemic, which has forced stricter restrictions in large areas of the country and it sparked bitter disputes with local leaders over levels of government support.
Rishi Sunak has hinted again that taxes will have to go up, but not in the immediate future.
The Treasury pledged to “continue to show flexibility and creativity in our response,” and said the review was expected to be completed by the end of next month.
The review, he added, would establish department capital and resource budgets for 2021-22 and block grants for decentralized administrations during the same period when the pandemic places unprecedented peacetime demands on public finances.
Figures from the Office for National Statistics (ONS) showed that the national debt had reached a new record of £ 2.06 trillion in September as the government continued to borrow heavily to finance its COVID-19 answer.
The ONS said the sum represented the highest debt-to-GDP ratio, that is, debt versus the size of the economy, since 1960.
It is rising because government tax revenues are falling at a time when its spending is through the roof.
The ONS said £ 36.1bn was borrowed in September, £ 28.4bn more than in the same month last year.
Total indebtedness for the first six months of the financial year reached 208.5 billion pounds.
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Chancellor Rishi Sunak has faced accusations from critics of being too cautious with his virus support packages when the licensing plan ends.
They argue that the Employment Support Plan that replaces it next month will not prevent an increase in unemployment.
The Bank of England expects the unemployment rate to reach 7.5% by the end of the year. It is currently at 4.5%.
Sunak said the spending review would include a focus on job protection and provide “certainty” about budgets for the next financial year.
He said of the latest loan figures: “While it is clear that the coronavirus pandemic has had a significant impact on our public finances, things would have been much worse if we had not acted the way we did to protect millions of media. of life.
“I have made it clear that our enduring priority is to protect as many jobs and businesses as possible through this pandemic, which is what must be done with fiscal responsibility.
“Through our Comprehensive Employment Plan, we are protecting, supporting and creating millions of jobs across the country.
“Over time and as the economy recovers, the government will take the necessary steps to ensure the long-term health of public finances.”
