The Chancellor is believed to be ready to shelve the financial package – billed as the defining moment of the government – if the situation escalates again.
In an interview this morning, Mr Sunak did not dismiss the idea of rescheduling, but insisted the Treasury was ‘very much working towards the goal’ of having the Budget as expected.
The contingency planning underlines the anxiety in government about the recent rise in cases across Europe.
In an interview this morning, Mr Sunak did not dismiss the idea of rescheduling, but insisted the Treasury was ‘very much working towards the goal’ of having the Budget as expected
The government is on track to borrow around £300billion this year as it desperately tries to keep the economy afloat with schemes such as furlough
A delay would likely be until the spring of next year, and Mr Sunak could instead choose to deliver a ‘mini-spending review’ before Christmas to update departmental budgets.
One ally of Mr Sunak told the Financial Times: ‘While it’s very likely to happen, there is an element of uncertainty.
‘If we have a series of local lockdowns and a second spike, it’s not clear that would be the right time for a Budget.’
Speaking to Sky News today, the Chancellor said: “We’ve said that we plan to have a fiscal event in the autumn and we’re very much working towards that goal.”
Concerns have been rising about the prospects of a new wave of coronavirus, with daily cases topping 1,000 again in the UK and many other European countries struggling to maintain control.
The government is on track to borrow around £300billion this year as it desperately tries to keep the economy afloat.
But Boris Johnson has vowed ‘colossal investment’, dismissing the idea that ministers will resort to austerity.
Mr Sunak has admitted that tough choices will be needed in the medium term to balance the books, with tax rises seemingly in the pipeline.
But the spending taps are expected to remain on for at least another year in order to avoid disastrous scarring to the economy and fueling a massive increase in unemployment.
The scale of the problems were underlined today with figures showing UK plc shrank by a shocking 20.4 per cent in the three months to June, the biggest fall in modern history, with record reductions in construction, services and production.
Official figures showed UK plc shrank by 20.4 per cent in the three months to June
Monthly GDP figures produced by the ONS show that the economy has bounced back to an extent since April. Percentages cannot be added up to give overall change during the period
The Office for National Statistics said the UK had been harder hit in the first half of the year than many other economies
The news means the country is officially in recession – defined as two consecutive negative quarters – for the first time since the credit crunch.
The economy dipped 2.2 per cent in the first three months of the year, and is now smaller than it has been since 2003. The hit – thought to be the worst recession in 100 years – is harder than in every other major economy except Spain.
However, there was a glimmer of hope with the single month GDP figure for June bouncing back by 8.7 per cent as lockdown restrictions eased.
Mr Sunak said the tumble showed that ‘hard times are here’ and warned many more jobs will be lost – urging people to get back to offices and help revive the economy.
‘I’ve said before that hard times were ahead, and today’s figures confirm that hard times are here,’ he said.
‘Hundreds of thousands of people have already lost their jobs, and sadly in the coming months many more will.