Chancellor Rishi Sunak unveiled the true economic impact of Covid-19 and the subsequent lockdowns in his highly anticipated Spending Review yesterday (November 25th) – and warned the ‘economic emergency’ had only just begun.

 

With so much uncertainty and turmoil caused by the pandemic, the Chancellor opted to set out plans for only the following year, rather than the usual three – here’s everything you need to know about the review.

 

Facing Covid-19

 

It’s no secret that the pandemic has had a detrimental effect on the economy, from mass redundancies to payouts through Government schemes such as furlough. In the latest review, the Chancellor announced that the Government would spend £280 billion this year to help the country through the pandemic.

 

A further £18 billion is set to be allocated to testing, PPE and vaccines next year, with a further £3 billion to the NHS.

 

The impact? The State is expected to borrow £394 billion – the highest amount in over 300 years – and the economy is set to shrink by 11.3 per cent. Forecasters believe it’s unlikely it will return to its pre-crisis size until late 2022 at the earliest.

 

Latest figures also show that unemployment hit its highest rate since May to July 2012, with 1.62 million people currently out of work due to the pandemic – a rise of more than 300,000 on last year’s figure.

 

Public sector pay freezes

 

In a bid to level out the damage between public and private sectors, protect jobs and claw back some of the money lost to the pandemic, public sector pay is set to be frozen in 2021.

 

NHS workers and those earning below the media wage of £24,000 however, will be guaranteed a pay rise of over £250.

 

Levelling Up Fund

 

As part of Boris Johnson’s agenda to improve standards of living in disadvantaged areas across the UK, a new £4 billion Levelling Up Fund has been announced to pay for projects chosen by these areas.

 

The scheme is designed to fund the infrastructure of everyday life and eligible areas will bid for funds to build necessary facilities such as transport improvements, better shopping streets, libraries or museums.

 

Housing infrastructure

 

As part of the £7.1 billion National Home Building Fund, the North East is set to benefit from over £70 million in housing infrastructure, including £25 million for junction improvements, land assembly and increased school capacity.

 

The fund will invest in key infrastructure to provide support to small and medium-sized enterprise housebuilders and will unlock up to 860,000 homes across the country.