UK’s Sunak to squeeze spending after pandemic splurge but will unfreeze public sector pay

After blowing the biggest hole in the public finances ever seen in peacetime to fight the COVID-19 pandemic, Britain’s finance minister Rishi Sunak is expected to squeeze spending in a half-yearly budget speech on Wednesday.

Some economists fear tough controls now could weaken the economy’s recovery which has slowed.

But Sunak will also promise billions of pounds in longer-term investment to help Prime Minister Boris Johnson meet his promise to “level up” poorer regions and burnish his green credentials ahead of the COP-26 climate summit.

Sunak will unfreeze public sector pay when he presents his budget in two days’ time, the finance ministry said on Monday.

The size of the pay rise will depend on recommendations from pay review bodies that set wages for frontline workers, the finance ministry said in the 17th budget announcement to be released in advance of Sunak’s statement on Wednesday.

The finance ministry also confirmed that the national minimum wage for people aged 23 and above will be lifted in April to 9.50 pounds ($13.06) an hour from 8.91 pounds.

Sunak is expected to set fairly tight limits for most areas of day-to-day public spending in his budget on Wednesday, which will seek to lower public debt after a record surge in borrowing during the pandemic.

The measures announced in advance of the budget include funding for the health service, education and regional transport.