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Austerity will “certainly not” be part of the government’s response to the economic damage caused by coronavirus, Boris Johnson has said.
The prime minister suggested he would plough on with plans to ramp up government spending, suggesting it could “encourage” the economy to “bounce back” after the crisis.
He rejected suggestions he would have to make large-scale spending cuts and claimed he “never particularly liked the term” austerity
It comes despite the Office for Budget Responsibility (OBR) suggesting a three-month lockdown could cause a 35% hit to the UK’s growth and leave two million extra people unemployed.
The spending watchdog also warned that public sector net borrowing, which illustrates the size of the deficit, could reach 15% of gross domestic product (GDP) in the 2020/21 tax year, making it the largest single-year deficit since the Second World War.
Conservative-led governments supported by Johnson responded to the smaller deficit caused by the 2008 financial crash by slashing spending as part of the austerity programme led by David Cameron and George Osborne.
Johnson had been attempting to break with that approach, boosting Whitehall spending and promising massive infrastructure investment to “level up” Britain’s regions.
Asked whether coronavirus could force him into another round of austerity, the PM told the daily Downing Street briefing: “You know what my instincts are. I think the economy will bounce back strongly.
“I think that this government will want to encourage that bounceback in all kinds of ways.
“I’ve never particularly liked the term that you just used to describe government economic policy and it will certainly not be part of our approach.
“‘Austerity’, by the way, was the term.”
Chancellor Rishi Sunak has already pledged hundreds of billions of pounds’ worth of government spending to help businesses and workers through coronavirus.
It includes a furlough scheme that is seeing the government pay 80% of workers’ wages and a programme of grants, reliefs and loans to help businesses.