A £3bn package of new spending to support the NHS in recovering from the pandemic is expected to be announced by the chancellor at next week’s Spending Review.
The NHS will get £1bn to address backlogs by catching up on checks, scans and operations that were delayed by COVID-19.
Around £1.5bn will be used to ease existing pressures in the health service and £500m will help support mental health services.
He said: “The pandemic has had a major impact on mental health because of increased isolation and uncertainty.
“So it is vital we do everything we can to support our mental health services and ensure help is there for people.
“This funding will make sure those who need help get the right support as quickly as possible so they don’t have to suffer in silence.”
But he had a warning for the nation’s finances, telling the Sunday Times: “People will see the scale of the economic shock laid bare.
“We can see the data every month, and obviously the shock that our economy is facing at the moment is significant.”
He hinted that some combination of spending cuts and tax rises will have to follow but said it is a “question of timing” while the economy is in difficulty.
“While that’s happening, absolutely the right thing to do is to support the economy, and jobs are my number one priority, but – obviously – you can’t sustain borrowing on this level indefinitely,” he said.
“Once we get through that, we’ll have to figure out what the best way of returning to sustainable public finances is. I’m hopeful that by the spring, with positive news on both mass testing and vaccines, we can start to look forward.”
Mr Sunak’s Spending Review is highly-anticipated, but it could also spark industrial action if he confirms the government will impose a pay cap on millions of public sector workers.
Unions have reacted angrily to reports the chancellor would be announcing a pay limit, though frontline NHS doctors and nurses are expected to be exempt.
Mr Sunak will also unveil the much-delayed National Infrastructure Strategy for £100bn of long-term spending to help tackle the climate crisis and invest in transport.
He will also alter the Treasury’s “green book”, a set of rules to determine the value of government schemes which is thought to favour London and the South East of England.