LONDON (Reuters) – Britain will borrow almost 400 billion pounds this year to pay for the massive coronavirus hit to its economy, finance minister Rishi Sunak said on Wednesday, as the budget deficit jumps to its highest since World War Two.
The world’s sixth-biggest economy is now set to shrink by 11.3% in 2020, its biggest contraction since the early 1700s, before growing by 5.5% in 2021, Sunak said as he announced a one-year spending plan.
“Our health emergency is not yet over. And our economic emergency has only just begun,” he told parliament. “So our immediate priority is to protect people’s lives and livelihoods.”
Announcing the latest forecasts from the Office for Budget Responsibility (OBR), Sunak said public borrowing would be 394 billion pounds ($526 billion) in the 2020/21 financial year that began in April.
That was equivalent to 19% of gross domestic product, the highest ever during peacetime and almost double its level after the global financial crisis which took nearly a decade of unpopular spending cuts to work down.
In the 2019/20 year, which ended as the country began to be hit by the COVID-19 pandemic, borrowing was just over 56 billion pounds, or 2.5% of GDP.
Britain’s economy has been hit harder by the coronavirus pandemic than those of many other rich nations. Nearly 56,000 Britons have died from COVID-19, the highest death toll in Europe.
The OBR said the economy was only likely to regain its pre-crisis size at the end of 2022.
Sunak has rushed out emergency spending and tax cuts to offset the crisis, including a recent extension of the government’s centrepiece jobs protection scheme.
Sunak said the cost of the fight against coronavirus was now 280 billion pounds this year, up from a previous estimate of about 200 billion pounds.
He has previously said that now is not the time to start reining in borrowing sharply, with the economy likely to shrink again in the fourth quarter of 2020 after the latest coronavirus restrictions on businesses.
Over this year and next, day-to-day spending will rise in real terms, by 3.8%, the fastest growth rate in 15 years, Sunak said, adding that 100 billion pounds would be spent next year on longer-term investment, 27 billion pounds more than last year.
But he signalled early moves to offset at least some of his spending by announcing a freeze on pay for most public sector workers, except doctors, nurses and other health staff.
He also announced a reduction in Britain’s foreign aid budget.
“I want to reassure the House that we will continue to protect the world’s poorest, spending the equivalent of 0.5% of our national income on overseas aid in 2021,” Sunak said.
“And our intention is to return to 0.7% when the fiscal situation allows.”
Britain is also facing the risk of a trade shock in less than six weeks’ time when its post-Brexit transition deal is due to expire. No new trade agreement has yet been reached with the European Union.
($1 = 0.7490 pounds)
(Writing by William Schomberg; Editing by Catherine Evans)
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
