By Andy Bruce
LONDON, Feb 25 (Reuters) - British finance minister Rishi
Sunak should follow the lead of the United States by announcing
a 100 billion pound stimulus push in next week's budget to fuel
an economic recovery from the COVID-19 pandemic, a think tank
said on Thursday.
Sunak, who is due to announce a new budget plan on March 3,
has already racked up more than 280 billion pounds ($395
billion) in coronavirus spending and tax cuts, pushing Britain's
borrowing to its highest since World War Two.
The Resolution Foundation said Sunak should extend emergency
support for businesses and workers and announce a new round of
stimulus measures to alleviate unemployment, boost green
investment and help retailers.
Together, these measures would equate to an additional 100
billion pounds of stimulus, a smaller-scale version of the
massive recovery plan announced by new U.S. President Joe Biden.
"While in the U.S. debate has focused on President Biden's
$1.9 trillion stimulus plan, the UK debate has got stuck on how
to withdraw support," James Smith, research director at the
Resolution Foundation, said.
"Instead, the Chancellor should combine extending existing
support with fresh stimulus once restrictions are lifted to
deliver a 100 billion pound plan to boost Britain's recovery."
The Resolution Foundation, which last year predicted that
Sunak would need to U-turn on plans to phase out the furlough
scheme, said he should commit 27 billion pounds towards a
retraining and job support package to reduce unemployment.
It also recommended making permanent a 20 pound weekly
increase to the Universal Credit benefit for the low paid and
unemployed, an 18 billion pound green investment programme, and
30 billion pounds extending existing emergency support for
workers and firms.
Including a further 9 billion pounds for a voucher scheme to
boost Britain's high streets and retailers, the Resolution
Foundation said its proposals amounted to a stimulus plan
equivalent to around 5% of British economic output.
While smaller than the Biden plan, which is equivalent to 9%
of U.S. output, the Resolution Foundation said this reflected
the fact that Sunak has already provided significant support.
At a later date, tax rises will be needed to pay for the
extra support, the think tank said.
"At that point around 30 billion pounds of consolidation
will be needed to balance the current budget – and build fiscal
policy space for future recessions," the Resolution Foundation
said.
($1 = 0.7082 pounds)
(Reporting by Andy Bruce, editing by David Milliken)