Rishi Sunak announces the extent of the damage to the economy caused by coronavirus

In a sobering speech , the Chancellor laid out the extent of the financial damage caused by the pandemic and gave some brief details of the action taken by the government in the future.  As usual the devil may be in the detail and the situation will always remain fluiid

The Chancellor delivered his spending review on 25/11/2020 which was dominated by the financial effects of covid-19 in the UK

The main points annouced were:

  • the chancellor tells MPs the "economic emergency" from the coronavirus pandemic "has only just begun"
  • UK borrowing forecast to reach £394bn this year - equivalent to 19% of GDP and the highest recorded level in the country's peacetime history
  • pay freeze for public sector workers outside of the NHS.
  • unemployment to rise to a peak of 2.6 million people next summer - a level of 7.5%.
  • a £4.3bn package of support to help the jobless included a new three-year £2.9bn scheme to help one million unemployed people in their job search, alongside £1.4bn of new funding to increase Job Centre Plus capacity
  • a new £4bn "levelling up" fund to allow local areas to bid for funding for local projects.

Taxes - a hint was dropped:

  • Sunak said that the government had a "responsibility, once the economy recovers, to return to a sustainable fiscal position". Higher taxes coming???

Some good news?

  • the predicted economic contraction and rise in unemployment level were both less than the OBR's previous forecasts from the summer !

Read the full details here.

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