BoE boss says Rishi Sunak right to spend big on Covid
Bank of England governor Andrew Bailey backed chancellor Rishi Sunak’s approach to the public finances, saying he is right to throw the might of the state behind the coronavirus suppression effort.
“It is absolutely sensible that public resources, resources of the state, are being used to cushion the huge impact of this absolutely unprecedented shock,” Bailey told BBC Radio Devon.
His comments come after Sunak yesterday revealed that government borrowing is set to hit a peacetime record of £394bn this year.
Sunak will have spent around £280bn this year tackling coronavirus, and is planning to spend £55bn on the effort next year. He also laid out plans for an increase in public services and infrastructure spending.
Bailey today said that without unprecedented government and Bank of England support, the crisis “would have been unbearable for many people”.
Sunak himself this morning said that current projections for UK borrowing are “obviously not sustainable”.
Yet he said: “The priority I have to protect as many jobs as possible, which is why we’ve done all the things we’ve done.”
Bailey agreed with Sunak’s sentiment. “For the moment the key thing is to use all our resources and all our support. And that’s what the Bank of England and Treasury are doing to cushion and make this huge impact more bearable for people.”
“We are smoothing the [financial] impact over a number of years to come, and that is the right thing to do,” he said.
“How many years it will be sensible to smooth it over frankly we’ll have to see and we’ll have to be somewhat flexible about that.”