Key numbers and policies from Rishi Sunak’s spending review

Jon Stone
·2 min read
<p>The chancellor announced the establishment of a national infrastructure bank</p> (Reuters)

The chancellor announced the establishment of a national infrastructure bank

(Reuters)

Rishi Sunak delivered his spending review on Wednesday, with a mix of economic updates and policy changes. Here are the main points at a glance:

Overseas aid cut

The government is reducing the overseas aid budget to 0.5 per cent of gross national income in 2021, down from 0.7 per cent. The chancellor said he would return to 0.7 per cent “when the fiscal situation allows”

Public sector pay frozen

Workers in the public sector will have their pay frozen, with a few exceptions. The freeze won’t apply to the politically sensitive NHS, where doctors and nurses will still get a rise. 2.1 million lower paid workers on under £24,000, the national median wage, will get a pay rise of at least £250

Infrastructure bank established

The chancellor says he’s spending £100bn on infrastructure next year, and will establish a national infrastructure bank, headquartered somewhere in the north of England. There’ll also be a £4bn “levelling-up” fund where any local area can bid to finance new projects

Minimum wage goes up

The National Living Wage (which is different from the real living wage) will rise to £8.91 and be extended to over-21s, despite rumours it might be frozen

Budget deficit hits peacetime record high

The chancellor says the budget deficit is hitting £394bn this year, which is 19 per cent of GDP, or the highest peacetime level in history. But this is temporary to deal with what he calls “an economic emergency” – it will then fall to £164bn next year and be around £100bn for the rest of the forecast period

Record economic contraction

Sunak reveals that the OBR says the economy will shrink by 11.3 per cent this year, which is the biggest contraction in three centuries. It’s expected to rebound relatively quickly and return to its pre-pandemic size by 2022. This includes 5.5 per cent rapid growth next year, 6.6 per cent in 2022 and 2.3 per cent in 2022. It’ll tail off to 1.7 per cent in 2024 and 1.8 per cent in 2025.