Rishi Sunak has announced that the “economic emergency” caused by the pandemic has only just started, with the economy not forecast to return to its pre-coronavirus levels until the end of 2022.
This comes as official figures suggest the economy will shrink by 11.3 per cent this year, the largest recession in more than three centuries.
The chancellor also shared findings from the Office for Budget Responsibility (OBR) that the economic forecast for 2025 is 3 per cent lower than initially predicted in March.
Among the other major announcements, Mr Sunak said that some public sector workers would have their salaries frozen next year and that the overseas aid budget would be cut to 0.5 per cent of national income, a decision that was met with protest from the opposition benches.
He also referred to OBR figures predicting that 2.6 millions people in the UK would be employed next year, with the number expected to peak in the second quarter of 2021.
Mr Sunak added that the government would set aside £3 billion to help those out of work seek a job.
This and other funding pledges come as the government is predicted to borrow a total of £394 billion this year, a record amount in peacetime.
‘Attack on working class people’
Labour’s Angela Rayner has also slammed the spending review:
Zoe Tidman25 November 2020 14:50
Climate crisis
Ed Miliband has said the climate crisis was “almost invisible” in today’s spending review:
Zoe Tidman25 November 2020 14:48
Anger at pay freeze
Rishi Sunak has been accused of playing “divide and rule” after he justified freezing public sector salaries by arguing that pay in the private sector had also collapsed.
The chancellor has faced criticism from unions after announcing the pay freeze, with the PCS general sectretay saying civil servants and other public sector workers “will feel a deep sense of betrayal”.
Jon Stone, our policy correspondent, has the full story:
Zoe Tidman25 November 2020 14:33
And with Brexit looming…
Anneliese Dodds was critical of Rishi Sunak for not mentioning Brexit in his speech, despite the UK set to leave the transition period at the end of this year.
“In less than 40 days, we’re due to leave the transition period. Yet the chancellor didn’t even mention that in his speech,” the shadow chancellor said.
“There’s still no trade deal. So does the chancellor truly believe that his government is prepared and that he’s done enough to help those businesses that will be heavily affected?”
Zoe Tidman25 November 2020 14:22
Education unions react to spending review
Education unions have waded into the debate about pay freezes on public sector workers – including teachers.
Geoff Barton from the Association for School and College Leaders (ASCL) said the union was “deeply disappointed” at the news.
“The government asks more and more of teachers and leaders, and then effectively cuts their pay,” the general secretary said. “It should not be surprised if staff decide to leave the profession.”
Paul Whiteman, general secretary of school leaders’ union NAHT, said: “Hard-working public sector workers, who have been on the front line of the pandemic response should not be forced to pay for the recovery out of their own pockets.”
Rishi Sunak said the schools budgets will increase next year by £2.2bn – a funding boost schools were already expecting as part of pre-pandemic plans.
“We are pleased the chancellor has confirmed that the additional investment in schools through to 2023 remains on track following years of real-terms cuts,” Mr Barton from ASCL said following the spending review.
“However, any uplift in school funding is being wiped out by the huge cost of Covid safety measures and teacher supply cover which the government refuses to reimburse.”
Zoe Tidman25 November 2020 14:09
Labour criticise public sector pay freeze announced by Sunak
Labour has condemned the government’s decision to freeze the pay of some public sector workers as a “sledgehammer” blow.
Rishi Sunak told MPs that nurses and doctors in the NHS and the 2.1 million public sector employees who earn less than £24,000 would see pay increases next year, but that other public sector workers would have their salaries frozen.
As such, the chancellor said the “majority” of public sector workers would earn more money in 2021 than they did this year.
However, the shadow chancellor Anneliese Dodds said the pay freeze would bring a “sledgehammer” blow to consumer confidence. She also accused the government of mismanaging taxpayers’ money on an “industrial scale” this year.
Rishi Sunak pauses public sector pay rise but promises rises for NHS doctors and nurses
Rory Sullivan25 November 2020 13:45
Sunak’s spending review
UK economy not expected to return to pre-pandemic levels until end of 2022
Rory Sullivan25 November 2020 13:33
Overseas aid budget to be cut
Around £4 billion will be cut from the overseas aid budget next year, Rishi Sunak has said.
As predicted, the chancellor announced that the government will be cutting the budget down to 0.5 per cent of national income from 0.7 per cent.
This was met with cries of “shame” and “terrible” from the opposition benches.
Rory Sullivan25 November 2020 13:19
‘Economic emergency’ has only just started, says Sunak
Chancellor Rishi Sunak has said that the UK’s “economic emergency has only just begun”, with the Office for Budget Responsibility (OBR) suggesting that the economy is not set to recover to pre Covid-19 levels for another two years.
The OBR also predicts that the Covid-19 crisis would result in 2.6 million being unemployed next year.
Rory Sullivan25 November 2020 13:14
UK forecast to borrow £394bn this year, a peacetime record
The chancellor has said during his spending review that the country is set to borrow £394 billion this year as a result of the pandemic.
He said the emergency had prompted “the highest recorded level of borrowing in our peacetime history”, equivalent to 19 per cent of GDP.
“Borrowing falls to £164 billion next year, £105 billion in 2022/23, then remains at around £100 billion, 4% of GDP, for the remainder of the forecast,” Rishi Sunak added.
Meanwhile, the UK’s debt is set to rise from 91.9 per cent of GDP this year to 97.5 per cent in 2025/2026.
Rory Sullivan25 November 2020 13:03