Budget 2021: key points at a glance

Rishi Sunak is delivering his budget – here are the main points, with political analysis

Rishi Sunak says his budget delivers a stronger economy for the British people: stronger growth, public finances and employment. The chancellor says he will give people the support they need with the cost of living and levelling up.

The chancellor says inflationary pressures are affecting the UK economy, with the Office for Budget Responsibility (OBR) forecasting that inflation will average 4% next year.

He says the pressures are global in nature and are “impossible for us to address alone”. However the government will act to support households, he says.

The chancellor says forecasts from the Office for Budget Responsibility (OBR) show the economy will grow by 6.5% this year.

Sunak says it will take until the start of 2022 for the economy to return to its pre-pandemic size.

GDP will grow by 6% next year, 2.1% in 2023, 1.3% in 2024, 1.6% in 2025.

In March, the OBR had forecast growth of 4% this year, after a plunge of 9.9% in 2020 – the worst recession for 300 years.

The OBR’s estimate for long-term scarring for the economy has been revised down from 3% to 2%.

Unemployment is forecast to peak at 5.2%, down from a forecast for about 12% forecast last year.

Sunak says he is setting new “fiscal rules” for management of the public finances. Debt must fall as a percentage of GDP. In “normal times” the state should only borrow to invest in future growth, balancing everyday spending. This must happen by the third year of each forecast period.

Sunak says borrowing in the current financial year 2021-22 will be 7.9% of GDP, and will fall to 3.3% next year.

Debt levels will fall as a share of national income.

In March, the OBR estimated a budget deficit – the gap between spending and tax income – of £233.9bn for 2021-22, or about 10.3% of GDP.

Sunak says there will be a real-terms rise for every government department.

Departmental spending in this parliament will rise by £150bn, in the “largest increase this century”. Spending will grow in real terms by 3.8% a year.

Sunak says: “If anybody still doubts it, today’s budget confirms it. The Conservatives are the real party of public services.”

The Institute for Fiscal Studies estimates average real-terms annual growth in departmental resource budgets was higher in previous years, above 4% in 2000 and 2002 under Labour, and 4.1% under the Conservatives in 2019.

There will be grant funding for local government £4.8bn, in the “largest increase in core funding for over a decade”.

Overseas aid will return to 0.7% of GDP by the end of the parliament, after a cut to 0.5% announced last year.

Sunak says funding for each pupil will be returned to 2010 levels, in an increase worth £1,500 a pupil.

The government is tripling investment to create 30,000 special school places, he confirms.

Total support for catch-up funding because of the Covid pandemic will be almost £5bn.

Sunak announces £1.7bn of funding in the first grants from the Treasury’s Levelling Up Fund, for towns and cities including Stoke-on-Trent, Leeds, Doncaster and Leicester.

The funding includes allocations to constituencies held by the Labour leadership, he indicates: “We’re so committed to levelling up we’re even levelling up the opposition front bench.”

Libraries will be “renovated, restored and revived”.

Tax relief on museums and galleries was due to be announced in March next year; it will be extended until March 2024.

The chancellor says he will increase investment to support London-style transport across the regions of England.

The government will invest £21bn on roads and £46bn on railways to improve journey times between cities.

Sunak announces the government’s target for hitting research and development spending will reach £22bn by 2026-27, two years later than had been initially planned.

The government will invest £20bn in R&D by 2024-25. Sunak says this stands as a “record investment to secure the UK’s future as a global science superpower”.

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from The Guardian https://ift.tt/3mhZ5ME