Friday, 27 Nov 2020

Rishi Sunak accused of ‘McDonnell indoctrination’ as Chancellor admits UK ‘spending a lot’

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Rishi Sunak has overseen the launch of several schemes aimed at boosting the economy and avoiding mass unemployment in light of the coronavirus pandemic. The Chancellor said there is “cautious optimism” about the prospect of the British economy recovering if COVID-19 restrictions are eased from next month. But Channel 4 Economy Correspondent Helia Ebrahimi confronted Mr Sunak about the high spending and questioned whether former shadow Chancellor John McDonnell had affected his masterplan.

Ms Ebrahimi said: “Is there a limit to how much you could spend? I mean, do you care about that?

“Have you been indoctrinated by John McDonnell?:

The former Labour frontbencher came under fire last year after the party manifesto introduced a series of economic proposals that would have taken British spending to £400 billion.

But Mr Sunak insisted the Government has a limit and will stop borrowing as soon as the worst of the pandemic has passed.

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The Chancellor said:Of course there is a limit. We are spending a lot.

“It does matter because the way we’re funding that is by borrowing and we’re going to borrow an enormous amount this year.

“Once we get through this crisis, that level of borrowing is not going to be sustainable.”

The British economy showed signs of a slight recovery after the lockdown restrictions began to be eased in May and people resumed going out during the summer.

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But latest figures have forecast the new lockdown in place across England until December 2, and the restrictions in place across Wales, Scotland and Northern Ireland could further shrink the economy.

Mr Sunak said: “Figures show the economy did recover through the summer but that recovery slowed coming into the autumn and it’s likely that continues as a result of the necessary restrictions we’ve had to put in place.

“But I think there are reasons for cautious optimism.”

Last week, the Chancellor confirmed the job retention furlough scheme would be extended until March 2021 in a bid to avoid mass unemployment in the aftermath of the second wave of the pandemic.

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Under the furlough scheme, the Treasury will pay out up to 80 percent of wages for employees whose workplace was forced to shut down because of the virus.

The Office of National Statistics said the economy grew 1.1 percent month-on-month in September as the recovery since the worst of the recession in April began.

Figures show the economy was still 8.2 percent below levels seen in February before the crisis struck despite the record-breaking jump in gross domestic product (GDP) in the third quarter.

Samuel Tombs, at Pantheon Macroeconomics, cautioned growth will probably not recover to September’s level until next spring.

Manufacturing has been hit hard by the pandemic and official figures on Thursday showed the sector is still 8.1 percent below levels seen at the end of last year, despite a rebound in the third quarter.

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