Analysts call for extending virus support in budget

Britain must use next month’s budget to  extend coronavirus financial support measures and tackle inequalities exacerbated by the Covid crisis before a gradual withdrawal as the virus lockdown is eased, analysts urged Tuesday.

Chancellor Rishi Sunak, who delivers his annual budget on March 3, should focus on securing economic recovery instead of raising taxes to fix virus-ravaged public finances, the Institute for Fiscal Studies (IFS) and Citi bank analysts said in a joint report.

Sunak must also help the economy – which shrank by almost 10 percent due to the pandemic – adjust to the “triple challenge” of Brexit, Covid and the green energy transition, they added.

“The budget needs to announce well-targeted extensions in emergency support to households and employers over coming months,” it said.

“It also needs to set out a plan for phasing them out. The economy cannot adjust and recover until most of this support has been removed.

“The chancellor also needs to set out plans for how to help the economy recover and adjust to a new normal,” it added.

The government’s furlough jobs support scheme, which was launched in March during Britain’s initial Covid-19 lockdown, is scheduled to stop at the end of April.

Economists fear that the demise of the scheme, which pays the bulk of wages for millions of private-sector workers, could spark a fresh surge in unemployment.

The IFS said that lower-income households had not been able to save as much cash as richer counterparts, sparking greater inequality in society during the crisis.

“Any significant continuation of the furlough scheme must be limited and carefully targeted,” said IFS director Paul Johnson.

“In the recovery phase, (Sunak) needs to support jobs and investment, but also crucially needs to recognise and address the multiple inequalities exacerbated by the crisis.”