The UK needs to quadruple its planned crisis spending to restore jobs, investment and services amidst the pandemic, according to a think tank report.
The Institute for Public Policy Research (IPPR) called on Chancellor Rishi Sunak to “boost it like Biden” as researchers calculated that £190 billion is needed to get the UK economy back on track.
This is four times as much as Mr Sunak has committed so far and a figure which matches the ambition of US President Joe Biden’s new administration, according to the think tank.
Failure to deliver this risks the UK economy falling into a “stagnation trap” with about half the rate of economic recovery, the report by the IPPR’s Centre for Economic Justice warns.
It found that the economic boost so far announced by Mr Sunak for the fiscal year 2021/22 is worth about 2% of the value of the entire UK economy prior to the pandemic.
However, a recovery plan worth £190 billion – equivalent to around 8.6% of the value of the economy – would deliver a faster recovery and halve the number of job losses.
This would be similar to the scale of the 1.9 trillion dollar stimulus package planned by the Biden administration, which is equivalent to 8.9% of the value of the US economy.
The report said the UK stimulus should be focused on supporting businesses, workers and households hardest hit by the pandemic, restoring public services and helping the growth of sustainable industries and jobs.
Carsten Jung, the IPPR’s senior economist and lead author of the report, urged the Chancellor to use next month’s budget to provide “bold support” for the economy.
“All in all, the risk of doing too little far outweighs the risk of doing too much,” he said, “Joe Biden has understood this. Rishi Sunak should follow his lead.”
George Dibb, head of IPPR’s Centre for Economic Justice, said: “We estimate that an ambition similar to that of the US would be needed to get our own economy back on track.
“Otherwise we will face years of unnecessary economic pain, with fewer jobs, less investment and a slower recovery for everyone.
“It’s time for the UK to boost it like Biden.”