Chancellor outlines spending review
Chancellor Rishi Sunak has announced details of his spending review against the backdrop of the Covid-19 pandemic which has seen the economy contract at record levels.
To assist recovery, the minimum wage has been increased along with modest rises for public sector earning below the median wage.
A £4bn 'levelling up' fund has been created which will allow local regions to bid for cash for their own projects.
The government has also earmarked £100bn for public infrastructure projects, which will be overseen by a new bank based in the north. From next spring, the bank will fund programmes alongside private sector investment.
With unemployment predicted to rise to a peak of 2.6m people (7.5 per cent) in the second quarter of next year, a £3bn programme will launch to assist those who have been unemployed for more than a year.
The chancellor outlined how the UK's economy has shrunk by 11.3 per cent in 2020, which is the largest fall in output for more than 300 years. The country is not expected to see pre-pandemic levels of output again until the last quarter of 2022, and he said that the economy will still be be around 3 per cent smaller by the time of the March 2025 budget.
The plans laid out by the chancellor will see the government borrow a projected £394bn this year, the equivalent to 19% of GDP, and the highest levels during peacetime. The chancellor said that the pandemic has cost the government more than £280bn so far.
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