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Summary
- UK government is rolling out an expenditure of £280-bn this year and £55-bn next year to handle the coronavirus pandemic
The UK Chancellor Rishi Sunak released the public spending plan on Wednesday 24 November, setting out the government’s allocations to different services and departments. The review prioritised the nation’s response to Covid-19 with a focus on jobs, businesses, and public services, among other things. Sunak added that the government was spending a total of £280 billion this year for the country to sail through the pandemic. Its expenditure on supporting the economy next year was estimated to be £55 billion.
Sunak has provided a significant increase in the overall spending. For one, the National Health Service has been allocated £3 billion worth of extra funding to effectively manage the crisis.
Generating new and supporting existing jobs has been the chancellor’s key focus area in the review. An amount of £3 billion has been allocated to a ‘restart plan’ that would help 1 million plus jobseekers to find employment. Additionally, £1.4 billion cash would be given to boost the job center capacity. Funds worth yet another £1.6 billion would be delivered to the ongoing kickstart scheme to aid job placements for the young Brits. National minimum wages would also be raised, emphasised Sunak.
The chancellor revealed that the government would cut its overseas aid budget to 0.5 per cent in the next year, with an allocation of £10 billion under it. The government intended to return to a 0.7 per cent level, as and when the fiscal situation permitted, he added.
Public sector pay
The chancellor announced that the salary hike for the public sector would be paused for the next year. However, this comes with an exemption for nearly 1 million nurses and doctors at the NHS.
Sunak revealed that more than 2 million public sector employees who earned less than the median salary of £24,000 would get a pay hike of at least £250.
Departmental spend
Sunak indicated that the day-to-day departmental expenditure would be rising by 3.8 per cent, amounting to an addition of £14.8 billion. It was its fastest growth seen in the spend during the past 15 years, he informed.
Government’s core health budget is slated to rise by £6.6 billion. 50,000 new nurses would be hired.
The school budget of the government has been increased by £2.2 billion.
Infrastructure investment
A budget of £100 billion has been allocated towards investment in infrastructure for the next year. The government also plans to deliver highest levels of sustainable investment in the past 40 years.
Sunak shared that the government would be setting up a new infrastructure bank. He also announced a levelling up fund worth £4 billion for funding local projects across the nation.
Economy’s review
Sunak said that the forecast from the UK’s Office for Budget Responsibility emphasised that the British economy would shrink by 11.3 per cent this year, being the largest contraction in the past 3 centuries.
It will take the British economy until the end of the year 2022 to return to its pre-pandemic size.
The unemployment rate is projected to peak at a value of 7.5 per cent by the second quarter next year.
The budget deficit is estimated to be £394 billion this year, he said. This will total up to 19 per cent of the nation’s gross domestic product.
The government borrowings are expected to be £164 billion for the next year, he added.
