Chancellor Rishi Sunak has told MPs that the UK economy is set to shrink by 11.3% this year, with the consequences of the Coronavirus pandemic beginning to take a real hold on the UK finances.
Mr Sunak confirmed that £18bn would be allocated to testing, PPE and vaccines and £3bn for the NHS plus over £2bn to keep transport routes open, plus more than £3bn to local authorities and £250m to help end rough sleeping.
It was also announced that this year a total of £280bn has been provided to get the country through coronavirus.
The decline is the biggest in over 300 years but GDP is expected to grow by 5.5% in 2021 but will not recover to pre-crisis levels until the fourth quarter of 2022. Borrowing is expected to reach £394bn for the current fiscal year, or 19% of GDP – the highest recorded level of borrowing in peacetime.
Unemployment is expected to peak at 7.5% in the second quarter of next year.
Pay rises for over a million nurses, doctors and others working in the NHS but pay rises “paused” for the rest of the public sector next year.
The government will also cut foreign aid spending to the equivalent of 0.5% of national income in 2021.
