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26 November 2020

Spending Review Summary

Spending Review Summary

Spending Review Summary, 26 November 2020

The Chancellor of the Exchequer Rishi Sunak presented his 'Spending Review 2020' to Parliament on Wednesday 25 November 2020.

Rishi Sunak has now laid out what Government's expenditure intentions are for next year; a reduced-term horizon (hence the exclusion of the "comprehensive" prefix to the spending review) reflecting the extreme uncertain times expedited by the Covid-19 pandemic.

In his statement, the Chancellor was quick to point out that the coronavirus health emergency is not over and the economic emergency has only just begun. He sees the immediate priority as protecting people's lives and livelihoods.

Spending plans for health, education, transport and other public services have now been updated and the Chancellor provided and update on the state of the UK economy and the latest UK public finances forecasts.

This year the government is spending £280 billion to get the country through Covid-19, with the priority on jobs, businesses and public services.

Next year, the government will allocate an initial £18 billion to fund testing, PPE and vaccines. There will be also be £3 billion for the NHS, £2 billion for keeping transport running and £3 billion to local councils. Total public services funding to tackle coronavirus in 2021 will be £55 billion.


The Economy

  • Economy to contract by 11.3% in 2020, the largest decline for over 300 years
  • Economy to grow by 5.5% in 2021 and by 6.6% in 2022
  • Output is not forecast to return to pre-pandemic levels until Q4 2022
  • Unemployment to rise to 7.5% in Q2 2021, with 2.6 million people out of work

Employment and business

  • A new £4.6 billion package to help people back to work
  • £2.6 billion for a Restart scheme to support those out of work for 12 months
  • £1.6 billion for the Kickstart scheme to subsidise jobs for young people
  • £375 million skills package, including £138 million for Lifetime Skills Guarantee
  • New £4 billion "levelling up" fund to finance local infrastructure projects
  • Business rates multiplier will be frozen in 2021-22

Scotland, Wales and Northern Ireland

  • £4.7 billion cash increase for the devolved administrations, including £2.6 billion fund to boost Covid recovery
  • Scotland will get £2.4 billion, Wales £1.3 billion and Northern Ireland £900 million


  • An estimated 1.3 million public sector workers will see their pay frozen in 2021-2 but most NHS workers and those earning less than £24,000 will still get an increase
  • National Living wage to rise by 2.2%, or a minimum of £345, to £8.91 an hour and 23 and 24-year olds will qualify for living wage for the first time
  • Overseas aid budget is to be cut from 0.7% to 0.5% of national income, a reduction of about £4 billion

The Chancellor frequently referred to forecasts from the Office for Budget Responsibility (OBR). The OBR has published its forecasts alongside the Spending Review; it references the following implications with relation to Brexit:

  • The UK economy could shrink by a further 2.1% - on top of the projected impact of Covid - if there is no trade deal with the EU
  • A warning of "various temporary disruptions to cross-border trade" if current talks ended without an agreement, affecting growth for up to five years
  • Trade deals with other countries are unlikely to compensate



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