Highlights: Sunak delivers spending plans to parliament

Britain's Chancellor of the Exchequer Rishi Sunak speaks at the House of Commons in London, Britain

British finance minister Rishi Sunak announced a one-year spending plan to parliament along with new forecasts for the country’s coronavirus-hit economy.

Below are highlights from the speech:

HEALTH EMERGENCY, ECONOMIC EMERGENCY

“Our health emergency is not yet over. And our economic emergency has only just begun. So, our immediate priority is to protect people’s lives and livelihoods. But today’s Spending Review also delivers stronger public services. Paying for more hospitals, better schools and safer streets. And it delivers a once-in-a-generation investment in infrastructure.”

SPENDING

“This year, we are providing 280 billion pounds to get our country through coronavirus. Next year, to fund our programmes on testing, personal protective equipment, and vaccines – we are allocating an initial 18 billion pounds.”

ECONOMIC FORECASTS

“The OBR forecast the economy will contract this year by 11.3%, the largest fall in output for more than 300 years. As the restrictions are eased, they expect the economy to start recovering… …growing by 5.5% next year, 6.6% in 2022, then 2.3%, 1.7% and 1.8% in the following years.”

“Our economic output is not expected to return to pre-crisis levels until the fourth quarter of 2022. And the economic damage is likely to be lasting. Long-term scarring means, in 2025, the economy will be around 3% smaller than expected in the March Budget.”

DEBT

“The economic impact of coronavirus, and the action we’ve taken in response, means there has been a significant but necessary increase in our borrowing and debt. The UK is forecast to borrow a total of 394 billion pounds this year, equivalent to 19% of GDP. The highest recorded level of borrowing in our peacetime history. Borrowing falls to 164 billion pounds next year, 105 billion pounds in 2022-23, then remains at around 100 billion pounds, 4% of GDP, for the remainder of the forecast. Underlying debt – after removing the temporary effect of the Bank of England’s asset purchases – is forecast to be 91.9% of GDP this year.”

“Underlying debt is forecast to continue rising in every year, reaching 97.5% of GDP in 2025-26. High as these costs are, the costs of inaction would have been far higher.”

UNEMPLOYMENT

“Despite the extraordinary support we’ve provided, the OBR expects unemployment to rise to a peak in the second quarter of next year, of 7.5% – 2.6 million people. Unemployment is then forecast to fall in every year, reaching 4.4% by the end of 2024.”

PUBLIC SECTOR PAY

“I am taking three steps today. First, taking account of the pay review bodies advice, we will provide a pay rise to over a million Nurses, Doctors and others working in the NHS. Second, to protect jobs, pay rises in the rest of the public sector will be paused next year. But third, we will protect those on lower incomes.”

TOTAL DEPARTMENTAL SPENDING

“Next year, total departmental spending will be 540 billion pounds. Over this year and next, day-to-day departmental spending will rise, in real terms, by 3.8% – the fastest growth rate in 15 years. In cash terms, day-to-day departmental budgets will increase next year by 14.8 billion pounds.”

HEALTHCARE SPENDING

“Next year, the core health budget will grow by 6.6 billion pounds, allowing us to deliver 50,000 more nurses and 50 million more general practice appointments.”

AID BUDGET

“During a domestic fiscal emergency, when we need to prioritise our limited resources on jobs and public services… …sticking rigidly to spending 0.7% of our national income on overseas aid, is difficult to justify to the British people… …especially when we’re seeing the highest peacetime levels of borrowing on record.

“I want to reassure the House that we will continue to protect the world’s poorest: Spending the equivalent of 0.5% of our national income on overseas aid in 2021, allocating 10 billion pounds at this Spending Review. And our intention is to return to 0.7% when the fiscal situation allows.”

INFRASTRUCTURE

“Our final priority is to deliver our record investment plans in infrastructure. Capital spending next year will total 100 billion pounds – 27 billion pounds more in real terms than last year. Our plans deliver the highest sustained levels of public investment in more than 40 years.”

“We’re publishing today a comprehensive new National Infrastructure Strategy. To help finance our plans, I can announce we will establish a new UK infrastructure bank. Headquartered in the north of England, the Bank will work with the private sector to finance major new investment projects across the UK – starting this spring.”

“LEVELLING UP” PLAN

“Today I’m announcing a new Levelling Up Fund worth 4 billion pounds. Any local area will be able to bid directly to fund local projects.”

“This is about funding the infrastructure of everyday life: A new bypass; Upgraded railway stations; Less traffic.”

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