Budget watchdog to reveal ‘sobering’ impact of coronavirus on economy

The damage done by coronavirus to the economy and public finances will be laid bare as Chancellor Rishi Sunak sets out his plans for the next year.

Official forecasts from the Office for Budget Responsibility (OBR) make a “sobering read”, No 10 admitted ahead of Mr Sunak’s Spending Review.

The Chancellor is expected to pump billions more of taxpayers’ money into efforts to support jobs and help the health service cope with the impact of the pandemic.

The OBR has previously estimated the Government will borrow £372.2 billion in 2020-21 but the latest figures will be revealed alongside the Chancellor’s statement on Wednesday afternoon.

A No 10 spokesman said Mr Sunak and Treasury Chief Secretary Stephen Barclay updated the Cabinet ahead of the Spending Review.

“Cabinet was told the OBR forecasts will show the impact the coronavirus pandemic has had on our economy and they will make for a sobering read, showing the extent to which the economy has contracted and the scale of borrowing and debt levels,” the spokesman said.

“But – as the IMF (International Monetary Fund), OBR and others have pointed out – the costs would have been much higher had we not acted in the way we have done.”

Ministers were told that Mr Sunak’s three priorities for the Spending Review, which will set departmental budgets for 2021/22, are protecting lives and livelihoods during the pandemic, investing in public services, and funding infrastructure to help “level up and spread opportunity” across the UK.

Mr Johnson told the Cabinet the Government would “work tirelessly on job creation, driving economic recovery and building back better”, the spokesman added.