Sunak set to unveil stimulus package in July to soften recession

Ministers are preparing to unveil an economic stimulus package in July, in an attempt to mitigate what is expected to be the biggest recession in living memory following the coronavirus crisis.

Chancellor Rishi Sunak is developing proposals to pump money into training schemes and infrastructure projects, as well as provide help for technology companies, according to government insiders.

With unemployment rising rapidly, the prime minister is also due to make a major speech in June aimed at encouraging Britons into work.

Whitehall figures said Dominic Cummings, Boris Johnson’s chief adviser, was the driving force behind the plans for the stimulus package along with other political aides in Downing Street.

One person familiar with the discussions about the package said government officials, referring to the Conservative party’s 2019 general election manifesto, had described it as the “manifesto on steroids”.

Mr Sunak refused to say on Friday if he would hold an emergency summer Budget as he set out detailed plans to extend the government’s job retention scheme until October.

He said ministers were working to “develop new ways to grow the economy, to back business, boost skills and help people thrive”.

Officials confirmed on Sunday that plans were being drawn up for a “fiscal event” in July, but said the announcement would not constitute a Budget.

The Treasury said: “The timings of any fiscal events will be updated in the usual way.”

Plans for a stimulus package come as ministers consider publishing a long-delayed national infrastructure strategy setting out £100bn of capital spending over the course of the parliament.

The document was originally meant to be released alongside Mr Sunak’s March Budget, and was supposed to outline detailed plans to improve broadband and transport infrastructure.

It was also meant to contain proposals to take the UK towards its target of net zero emissions by 2050 through investment in offshore wind and other green energy projects.

Some Number 10 officials are understood to be pushing for the national infrastructure strategy to be repackaged as spending that will contribute to Britain’s economic recovery after the Covid-19 crisis.

Some of the spending is likely to be targeted at so-called red wall constituencies in the Midlands and northern England that the Conservatives snatched off Labour at the December election.

Economists have predicted that the UK deficit for the current financial year could exceed £300bn because of the cost of the government’s rescue schemes for businesses and households, plus lost tax revenues.

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