Chancellor Rishi Sunak: Government can't support UK economy forever

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2-min read
Britain's Chancellor of the Exchequer Rishi Sunak speaks, during a coronavirus briefing in Downing Street, London, Monday, Oct. 12, 2020. (Toby Melville/Pool Photo via AP)
Britain's chancellor of the exchequer Rishi Sunak. Photo: Toby Melville/Pool Photo via AP

The UK government cannot continue to support Britain’s economy forever, the chancellor has said, suggesting tough choices will have to be made on future spending.

“Whilst it is right to act with scale during a crisis like this… it’s also right… that we always have one eye on the long-term public financing,” chancellor Rishi Sunak said during a press conference at Downing Street on Thursday.

“It’s clearly not sustainable to continue acting in this way forever.”

READ MORE: UK businesses in Tier 2 lockdowns get extra government support

The comments came hours after the chancellor announced new funding to support jobs and businesses hit by local lockdowns.

Announcing the measures, the chancellor said the Treasury was “ready to adapt our financial support as the situation evolves”.

But Sunak signalled during the Downing Street press conference that the spiralling cost of these repeated interventions meant they would have to be curtailed eventually.

READ MORE: UK government debt at highest level in 60 years

The government has spent £200bn ($263bn) since March on efforts to preserve the UK’s economy and protect jobs. The spending spree has pushed the UK’s national debt above £2tn, hitting its highest levels since the 1960s.

Sunak said managing the deficit down would lead to tough choices on future support.

“We won't always be able to do absolutely everything that everyone would like us to do,” he said.

READ MORE: UK economy faces 'perfect storm' as winter looms

The Treasury’s economic support measures have so far moved in lockstep with Downing Street’s COVID-19 restrictions. However, the chancellor’s comments raise the prospect of a potential break in that relationship if COVID-19 remains a persistent problem in the UK beyond the next six month.

Government support measures will remain in place at least through the ”difficult winter period” and into next spring, Sunak said.

Prime minister Boris Johnson said supporting the economy was the right thing to do given the circumstances.

“It’s far better to do that and keep the economy going because we’re going to have to pay this money back and we want to be in a position where the UK economy is kept alive,” Johnson said at the press conference.

Even the government’s unprecedented economic interventions have failed to stop unemployment spiking. Figures published last week showed 1.5m Brits were out of work.

WATCH: What is a budget deficit?