Chancellor Rishi Sunak has given his one-year Spending Review to the House of Commons.
Here are the key points from his 25-minute speech on Wednesday:
– Mr Sunak said the Government was providing £280 billion this year to get the country through the coronavirus crisis.
– The Office for Budget Responsibility (OBR) is forecasting the economy will contract this year by 11.3% – the largest fall in output for more than 300 years.
– The OBR expects the economy to start recovering once Covid restrictions are lifted, growing by 5.5% next year, 6.6% in 2022, then 2.3%, 1.7% and 1.8% in the following years.
– The pandemic is likely to have caused “long-term scarring”, meaning in 2025, the economy will be around 3% smaller than expected in the March Budget.
– The UK is forecast to borrow a total of £394 billion this year, equivalent to 19% of GDP – the highest recorded level of borrowing in peacetime history, according to Mr Sunak.
– Underlying debt is forecast to be 91.9% of GDP this year and is predicted to continue rising, reaching 97.5% of GDP in 2025/26.
– The OBR expects unemployment to peak at 7.5% in the second quarter of 2021 – 2.6 million people.
Taken together, public services funding to tackle coronavirus will total £55bn next year.
— Rishi Sunak (@RishiSunak) November 25, 2020
– The Chancellor announced that NHS doctors and nurses will receive a pay rise, but pay rises in the rest of the public sector will be “paused” next year.
– The 2.1 million public sector workers who earn below the median wage of £24,000 will be guaranteed a pay rise of at least £250 next year, however.
– The National Living Wage will increase by 2.2% to £8.91 an hour.
– Total Government department spending next year will be £540 billion, with day-to-day departmental spending rising, in real terms, by 3.8%.
— HM Treasury (@hmtreasury) November 25, 2020
– The overseas aid budget will be cut to 0.5% of gross national income in 2021 but Mr Sunak said the Government’s “intention” was to return to 0.7% when the fiscal situation allows. In 2019 the total aid budget was £15.2 billion.
– A new UK infrastructure bank – based in the north of England – to finance major new projects is set to be established.
– A £4 billion “levelling up” fund to finance local infrastructure improvement projects will also be created, Mr Sunak said.
– The Chancellor said that through the Barnett formula, Scottish Government funding will increase by £2.4 billion and Welsh Government funding by £1.3 billion, with £0.9 billion for the Northern Ireland Executive.