Chancellor Rishi Sunak has warned that Britain’s public finances will face “enormous strains” in the wake of the latest national lockdown.
Ahead of Wednesday’s Budget announcement, Mr Sunak told the Financial Times a bill for the government’s £280bn investment in coronavirus support will eventually have to be paid, with low interest rates leaving the nation’s finances “exposed”.
Mr Sunak said: “We now have far more debt than we used to and because interest rates… at least a month or two ago were exceptionally low, that means we remain exposed to changes in those rates.
“That’s why I talk about levelling with people about the public finances [challenges] and our plans to address them.”
Please use Chrome browser for a more accessible video player
How deep does the economic damage go?
While Mr Sunak did not reveal any details on specific tax measures, the Budget is expected to include a swathe of actions aimed at kickstarting the nation’s economy as lockdown eases over the coming months.
These include a £126m boost for traineeships and a mortgage guarantee scheme aimed at helping aspiring homeowners with small deposits onto the property ladder.
Mr Sunak added that while there is a challenge facing the nation’s economy, he believes the Budget will be a much-needed boon for those hit hardest by the pandemic.
Subscribe to the Daily podcast on Apple Podcasts, Google Podcasts, Spotify, Spreaker
He said: “I stood up at the beginning of this [coronavirus] thing and said I will do whatever it takes to protect the British people through this crisis and I remain committed to that.
“We went big, we went early, but there is more to come and there will be more to come in the Budget. But there is a challenge [in the public finances] and I want to level with people about the challenge.
“Some 750,000 people have lost their jobs and I want to make sure we provide those people with hope and opportunity. Next week’s Budget will do that.”