Sunak statement fails to address gathering Brexit storm

RISHI Sunak gave a mini-budget last week with shocking economic data confirming the UK's deepest recession in over 300 years. Yet, bad as this is, worse could still be to come with the end of the Brexit transition period - which was the glaring omission in the finance minister's statement.

For as problematic as the pandemic period has been for the UK, with an economic contraction expected of 11.3 per cent in 2020, Mr Sunak said that the "economic emergency has just begun". And this despite the battering of recent months which has necessitated public sector borrowing forecasts to hit £394 billion (S$702 billion) this year, equivalent to 19 per cent of gross domestic product (GDP) - the highest ever in peacetime with UK debt equivalent to 91.9 per cent of GDP.

While the finance minister's remarks refer specifically to the economic hangover from the continuing Covid-19 crisis, what he hardly acknowledged is that this will be exacerbated by Brexit and whether a trade deal between the European Union (EU) and the UK will be ratified by Dec 31 or not. Even before the impact of Brexit is factored in, unemployment is expected to reach 7.5 per cent next spring, with 2.6 million people out of work, while UK debt is forecast to rise further to 97.5 per cent of GDP by 2025-26.