The Chancellor, Rishi Sunak has made his Autumn 2020 spending review today. The UK’s spending on the Coronavirus has reached £280bn to date.
The Office of Budget Responsibility (OBR) forecasts that the UK’s economy will fall by 11% this year, with growth returning by 5% next year and not returning to pre-crisis levels until 2022.
- Borrowing is likely to be 19% of GDP this year, rising to 97.5% of GDP by 2025/26.
Employment and wages
- Unemployment is forecast to reach 7% next year.
- Private sector wages fell by 1%, public sector wages increased by 4%.
- A public sector wage increase cannot be justified at present. However, the chancellor is planning:
- A pay rise for NHS doctors and nurses.
- A pause on public sector wage rises next year.
- Lower paid public sector employees guaranteed a £250 pay rise next year.
- The National Living Wage to increase by 2.2% to £8.91.
- Funding announced for Scotland, Wales and Northern Ireland.
- Spending on overseas aid is currently difficult to justify:
- In 2021 spending will be 0.5%, returning to 0.7% when the situation improves.
- Will publish a new infrastructure policy and create a new British infrastructure bank.
- New ‘levelling up’ fund for local projects.
- Capital spending on infrastructure.
- £24bn will be spent on defence, an increase over the previous announcement by the prime minister of £16.5bn