Rishi Sunak's "frightening" economic forecast: Chancellor will expose devastating financial effects of the pandemic next week … and predict it will still be felt in 2024
- Rishi Sunak is due to issue a "scary" economic forecast for its spending review next week
- His plans will be based on the predictions showing the devastating effects of the coronavirus
- The Budgetary Responsibility Office, which is expected to forecast the pandemic, is set to weigh on the economy in 2024
Rishi Sunak will make a "frightening" economic forecast in next week's spending review, as reported last night.
The Chancellor's plans, to be announced in parliament on Wednesday, are based on predictions that prove the devastating effects of the coronavirus.
The Budgetary Responsibility Office is expected to forecast the pandemic will still weigh on the economy in 2024.
By that point it will have cost up to 3 percent of national income – £ 60 billion in today's prices.
Rishi Sunak's plans will be announced in parliament on Wednesday and are based on predictions showing the devastating effects of the coronavirus
An ally of the Chancellor said the projections would be "pretty scary" compared to those made in March. A Downing Street official added, "It doesn't look pretty."
The OBR is likely to follow the Bank of England and predict the economy will shrink nearly 11 percent in 2020. This is the worst annual performance in three centuries.
The deficit is projected to hit a peace record of nearly £ 400bn in 2020-21 and is still above £ 100bn by 2024-25, the Financial Times reported.
The grim economic outlook, coupled with the government's commitments to spend money on "leveling" the north and a "green revolution", will force Mr. Sunak to make tough decisions about taxes and public spending.
According to the Institute for Fiscal Studies and the Resolution Foundation, an estimated £ 40 billion a year has to be generated for tax increases.
An ally of the Chancellor said the projections would be "pretty scary" compared to what was seen in March
Sources said Mr. Sunak doesn't think the time is right to raise taxes or cut spending, and is determined to use next week's statement to signal that he is serious about the one caused by the pandemic Combat harm.
A well-placed insider said, "We have to show that we are making a start."
David Gauke, a former finance minister, said the seriousness of the budgetary position had "not yet been recognized".
"Once we are through Covid and its immediate aftermath, this will be the focus," he added.