Rishi Sunak has warned of cuts as the UK’s debt reached a record high of more than £2 trillion.
Public sector debt has reached £2.08 trillion at the end of October after Government borrowing hit £22.3 billion last month, according to official figures.
The Chancellor said spending billions on the pandemic was right thing to do, but warned that action would be needed to rebuild the public finances.
Mr Sunak said: ‘We’ve provided over £200 billions of support to protect the economy, lives and livelihoods from the significant and far-reaching impacts of coronavirus. This is the responsible thing to do, but it’s also clear that over time it’s right we ensure the public finances are put on a sustainable path.’
Visit our live blog for the latest updates Coronavirus news live
Reports suggest the Chancellor is considering a pay freeze for five million public sector workers to plug the black hole.
He will use next week’s spending review will limit pay rises in the public sector to at or below inflation, the Daily Mail reported.
Only the half a million frontline NHS doctors and nurses will be exempt from the cap in recognition of their work during the coronavirus pandemic, the paper said.
However teachers, police, members of the armed forces as well as NHS managers will all be affected.
The move is likely to be met with fury by public sector unions who say their members bore the brunt of Conservative austerity cuts following the global financial crisis.
The Treasury would not comment on the reports ahead of the Chancellor’s statement on Wednesday.
However, launching the spending review in July, Mr Sunak warned of the need for ‘restraint’ in future public sector pay settlements.
He said awards made in the review period would have to take account of the ‘wider economic context’.
The Chancellor also stressed the need for ‘fairness’ – pointing out that while public sector pay was rising, wages in the private sector had fallen back during the coronavirus pandemic.
The Office for National Statistics (ONS) said borrowing for the first seven months of the financial year is now estimated at £214.9 billion – the highest in any April to October period since records began in 1993.
It means that the UK’s overall debt has reached around 100.8% of gross domestic product (GDP) – a levels not seen since the early 1960s – as the Government has invested billions of pounds in supporting the economy through the pandemic.
October borrowing, excluding state-owned banks, was also a record and marked a £10.8 billion increase year-on-year.
This is a breaking news story, more to follow…
Get in touch with our news team by emailing us at [email protected].
For more stories like this, check our news page.