Chancellor of the Exchequer Jeremy Hunt’s budget preparations have been upended by the rush to limit damage from the collapse of Silicon Valley Bank as Treasury officials race to finalize a support package for the UK’s tech sector.
(Bloomberg) — Chancellor of the Exchequer Jeremy Hunt’s budget preparations have been upended by the rush to limit damage from the collapse of Silicon Valley Bank as Treasury officials race to finalize a support package for the UK’s tech sector.
Hunt is due to present his Spring Budget to lawmakers on Wednesday and is under pressure to boost growth amid forecasts of a recession and to address a prolonged cost-of-living crisis. The collapse of SVB has left the government looking to ringfence the country’s technology and life sciences industries from the biggest US bank failure in years.
The SVB fallout has interrupted Hunt’s preparatory work this weekend ahead of the budget as he attends emergency meetings with Prime Minister Rishi Sunak, Bank of England Governor Andrew Bailey and City Minister Andrew Griffith to address the situation.
“There is a serious risk to some of our most promising companies,” Hunt said Sunday on Sky News. That is “why the Prime Minister and I have been working at pace over the weekend.”
The UK unit of SVB has approached lenders about a rescue, Sky reported. The UK has pledged to support any businesses affected by the collapse, ensuring they are able to meet payment obligations including employee wages.
Read More: SVB Fallout Spreads Around World From London to Singapore
When Hunt does deliver his fiscal set-piece on Wednesday, he’ll announce measures to cut labor inactivity and boost business investment to spur UK economic growth. He’ll stress the need for continued fiscal responsibility after the economic chaos of the premiership of Liz Truss last year, though he has room for a few more giveaways thanks to a recent decline in gas prices which has improved the public finances.
“I am a Conservative who believes in the virtue of work,” Hunt told Sky on Sunday. “This is a budget in which I will be systematically going through all the areas where there are barriers that stop people working who want to.”
Since the start of the pandemic, more than 600,000 people have dropped out of the workforce. Relative to pre-Covid trends, over a million people are missing. The shortages have left businesses searching for staff and in some cases reducing hours. The trend is limiting the UK’s growth potential, drying up tax revenues and threatening to add to a pensions time bomb as baby boomers retire from the workforce.
–With assistance from Tom Metcalf.
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