Rishi Sunak. File
Britain is to launch a new Infrastructure Bank with £12 billion ($17 billion) in capital and £10 billion in government guarantees, the Treasury said on Saturday, aimed at kickstarting the economy.
The Chancellor of the Exchequer Rishi Sunak is expected to announce the initial funding at Wednesday’s Budget and the bank will launch in spring, the Treasury said.
“Britain’s businesses and the Great British public deserve world-class infrastructure and that is exactly what this new Bank will help us deliver for them,” Sunak was quoted as saying.
The bank is set to finance private sector projects in the green economy, focusing on areas such as carbon capture and renewable energy.
It will also provide loans to local authorities at low interest rates to support “complex infrastructure projects.” The Treasury said the Bank would unlock billions more in private finance to support a £40 billion infrastructure investment to “fire up the economy” and help reach commitments on net zero emissions and reducing regional deprivation.
The announcement comes as Britain’s economy has been hard-hit by pandemic lockdowns.
Analysts expect unemployment to surge when the UK government’s furlough scheme paying the bulk of wages for millions in the private sector ends -- as currently planned -- at the end of April.
Sunak last week hinted he would announce further employment support in the coming months.
The Chancellor first announced the planned Infrastructure Bank in November last year, saying its headquarters would be in northern England rather than in the financial hub of London.
The government said he is also expected to commit a further 375 million pounds to co-invest alongside the private sector in high-growth, innovative UK firms. While Sunak’s March 3 budget will include a new round of spending to prop up the economy during what he hopes will be the last phase of lockdown, he will also probably signal tax rises ahead to plug the huge hole in the public finances.
In an interview with the Financial Times, Sunak said he would use the budget to level with the public over the “enormous strains” in the country’s finances, warning that a bill will have to be paid after further coronavirus support. Rishi Sunak will use the budget next week to level with the public over the “enormous strains” in the country’s finances, warning that a bill will have to be paid after further coronavirus support, according to an interview with the Financial Times.
Sunak told the newspaper there was an immediate need to spend more to protect jobs as the UK emerged from COVID-19, but warned that Britain’s finances were now “exposed.” UK exposure to a rise of one percentage point across all interest rates was 25 billion pounds ($34.83 billion) a year to the government’s cost of servicing its debt, Sunak told FT. “That (is) why I talk about leveling with people about the public finances (challenges) and our plans to address them,” he said. The government has already spent more than 280 billion pounds in coronavirus relief and tax cuts this year, and his March 3 budget will likely include a new round of spending to prop up the economy during what he hopes will be the last phase of lockdown. He is also expected to announce a new mortgage scheme targeted at people with small deposits, the UK’s Treasury announced late on Friday.
Additionally, the government will also announce a new 100 million pound task force to crack-down on COVID-19 fraudsters exploiting government support schemes, it said.
Rishi Sunak will announce more funding for apprenticeships in England when he unveils his budget next week, the government said on Friday. Employers taking part in the Apprenticeship Initiative Scheme will from April 1 receive 3,000 pounds ($4,179) for each apprentice hired, regardless of age - an increase on current grants of between 1,500 and 2,000 pounds depending on age. The scheme will extended by six months until the end of September, the finance ministry said. Sunak will also announce an extra 126 million pounds for traineeships for up to 43,000 placements.
“We know there’s more to do and it’s vital this continues throughout the next stage of our recovery, which is why I’m boosting support for these programmes, helping jobseekers and employers alike,” Sunak said in a statement. British government bond prices recorded their sharpest fall in years this month, as investors bet on a rebound in growth and potentially inflation, days before finance minister Rishi Sunak sets out hefty new borrowing plans. The month’s sharp declines largely reflect a global sell-off led by US Treasuries. But gilts received an extra push on Friday after the Bank of England’s chief economist, Andy Haldane, warned that the “tiger” of inflation was stirring.
Shortly after Britain left the European Union, finance minister Rishi Sunak pledged a series of measures he dubbed “Big Bang 2.0” to ensure the City of London remained one of the world’s top financial centres.
British public borrowing surged again in August to a new record high, driven by huge outlays to combat the coronavirus pandemic, with the budget deficit so far this tax year overtaking its full-year peak during the global financial crisis.
The meeting of the Board of Governors of the Asian Infrastructure Investment Bank (AIIB) has approved the decision to host the Bank’s 2021 annual meeting in the UAE, during EXPO Dubai.
British firms called on Tuesday for another 7.6 billion pounds ($10.3 billion) of emergency government help, saying they cannot wait until Chancellor of the Exchequer (Finance Minister) Rishi Sunak’s March budget to learn if they will get more pandemic support.
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The International Monetary Fund (IMF) on Friday slashed its US economic growth forecast as aggressive Federal Reserve interest rate hikes cool demand but predicted that the United States would “narrowly” avoid a recession.