Coronavirus: Boris Johnson promises pandemic will not lead to return of austerity

Prime minister to signal borrowing splurge to accelerate infrastructure projects

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Boris Johnson will promise this week not to return to austerity policies in order to balance the UK’s finances in the aftermath of the coronavirus pandemic.

The prime minister’s vow will come in a high-profile speech on Tuesday designed to move his premiership on from the Covid crisis and reboot his election pledge to “level up” disadvantaged parts of the country.

The announcement sets the scene for massive additional borrowing to fund lavish building projects, at a time when the cost of the outbreak has already driven Britain’s state debt above 100 per cent of GDP.

Former chancellor Sajid Javid has already advised his successor Rishi Sunak to splash out on shovel-ready projects to restore momentum to the economy in an emergency mini-budget expected early in July, rather than trying to start paying down the deficit by raising taxes.

And former prime minister Sir John Major says Mr Johnson should borrow to pay for a “crusade for a decade” to improve the living standards of the key workers who helped Britain through the pandemic, end rough sleeping and do away with the need for food banks.

Declaring his intention to “build, build, build”, Mr Johnson is expected to say he wants to accelerate the infrastructure programme set out in the 2019 Conservative manifesto.

This included promises to construct 40 new hospitals over a decade, though the PM committed money only for the upgrade of six by 2025 and the development of plans for others.

Johnson also pledged to establish a Northern Powerhouse rail link between Leeds and Manchester and invest in a Midlands rail hub, while also improving and reopening train lines elsewhere in the country, spending almost £30bn on roads, backing green energy projects, opening new schools and building 300,000 new homes a year by the mid-2020s.

A senior Conservative source said the PM will use his speech to say that Britain’s response to Covid-19 will not be to rein in spending but to “double down” on investment plans and deliver projects faster.

And he will promise that there will be “no repeat” of the austerity policies that saw public spending, investment and welfare benefits slashed under the Tory-led coalition administration following the 2008 financial crash.

The International Monetary Fund last week forecast a 10.2 per cent decline in UK GDP this year – one of the steepest falls among developed economies – with only a partial recovery in 2021.