The UK’s Chancellor of the Exchequer Rishi Sunak delivered his Spending Review to the House of Commons on 25 November 2020.
The Chancellor’s Executive Summary outlined the state of the UK economy and gave the latest forecasts for the UK’s public finances. The summary states that the:
“Spending Review 2020 (SR20) prioritises funding to support the government’s response to Covid-19, invest in the UK’s recovery and deliver on promises to the British people. It sets departmental budgets for 2021-22 and devolved administrations’ block grants for the same period, confirming that core day-to-day spending – that is, before taking into account Covid-19 spending – will grow at an average of 3.8 per cent a year in real terms from 2019-20 to 2021-22. This is the fastest rate in 15 years.”
This year’s Spending Review has been announced during the UK’s second lockdown, just months after the Prime Minister, set out his agenda to rebuild Britain during the summer.
You can find the full Executive Summary here.
Key points from the chancellor’s Spending Review
- The government has allocated a further £280bn this year “to get our country through coronavirus”.
- The government is expected to borrow £394bn this year.
- The economy is predicted to contract by 11.3% this year and grow by 5.5% next year and 6.6% in 2022.
- Unemployment is expected to increase by 2.6 million by mid-2021. It is estimated that 1.62 million people are unemployed in the UK currently, 300,000 more than last year.
- Mr Sunak announced that public sector pay will be frozen, except for the lowest paid (nurses, doctors, and other NHS staff), who will get a pay rise.
- The national living wage will increase to £8.91 an hour and extend to over-21s.
- The healthcare budget is set to increase by £6.6bn.
- Budget for schools will increase by £2.2bn.
- Investment in infrastructure is high on the government’s agenda and spend will total £100bn in 2021.
- A new infrastructure bank which will be headquartered in the north of England is to be created.
- Spending on overseas aid in 2021-2 will be 0.5% of national income.
- A new £4bn fund for “levelling up” will be available – any local area can bid for funding for local projects.
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