Chancellor Rishi Sunak has announced government spending plans for the coming 12 months as part of his
Spending Review, delivered to the House of Commons on 25 November.
During his statement, Mr Sunak said the government had already spent £280bn supporting the economy
through the pandemic and pledged a further £55bn over the coming year as part of a series of measures designed
to aid economic recovery. As a result, government borrowing is set to rise to a peacetime high.
Estimates produced by the government’s independent forecaster, the Office for Budget Responsibility (OBR),
suggest the new measures will push borrowing up to £394bn in the current fiscal year, £22bn more than predicted
in August. OBR forecasts also imply borrowing will stay above £100bn per annum for the next five years and
warn tax rises or spending cuts will be required to stabilise the burgeoning debt. OBR Chairman, Richard Hughes, said, “The Chancellor will need to find £20bn to £30bn in spending cuts or tax rises if he wants to balance revenues and day t0 day spending, and stop debt rising by the end of this parliament.” Among other announcements, the
Chancellor said around 1.3 million public sector workers will have their pay frozen next year arguing he could not justify a rise when many private sector employees have seen pay and hours cut during the crisis. He did, though, confirm that some NHS staff and lower-paid workers will be excluded from the freeze. Mr Sunak also announced that the National Living Wage will rise by 19p per hour to £8.91, with the rate extended to cover those aged 23 and over. In addition, the Chancellor confirmed the government is suspending its commitment to spend 0.7% of national income on overseas aid; the new ‘temporary’ 0.5% target will yield savings of around £4bn.SFFS Economic Review_Nov 20