Key points from Rishi Sunak's Spending Review

The Chancellor Rishi Sunak delivered his Spending Review and latest economic forecasts to Parliament on 25 November 2020. 

Rishi Sunak says the Spending Review comes as the coronavirus health emergency is not over and the economic emergency has only just begun, and it will be years before the country fully recovers.

Saying he will prioritise jobs, businesses and public services, the chancellor says the government is spending £280bn to get the country through Covid-19.

In his first Spending Review, the Chancellor told MPs the UK economy is expected to shrink by 11.3 per cent this year - the largest fall in output for more than 300 years - and unemployment is to peak at 7.5 per cent, or 2.6 million people, in 2021.

The Government will borrow £394 billion this year, equivalent to 19 per cent of GDP - the highest ever recorded in peacetime - amid a warning that the economy will suffer "lasting damage".

NHS doctors and nurses will see a pay rise, but the rest of the public sector will be hit with a pay freeze, causing strong discontent from Labour and trade unions.

Next year some £55bn was earmarked for public services dealing with the crisis, including an initial £18bn for testing, personal protective equipment and vaccines. There will be £3bn for the NHS, £2bn for keeping transport running and £3bn to local councils.

Here are the main points of Rishi Sunak's Spending Review:


  • The Office for Budget Responsibility (OBR) show the economy will contract by 11.3% this year, the biggest decline in three centuries.
  • Sunak says it will take until the end of 2022 for the economy to return to its pre-pandemic size.
  • GDP will grow by 5.5% next year, 6.6% in 2022, 2.3% in 2023, 1.7% in 2024 and 1.8% in 2025.
  • In July, the OBR said its “central scenario” was for a 12.4% plunge in gross domestic product (GDP) this year.
  • This compares with estimates made at the start of November from the Bank of England for an 11% fall in 2020.


  • The budget deficit will be £394bn this year, or 19% of GDP – the highest level in peacetime.
  • Borrowing will remain at £164bn next year and remains at about £100bn for the remainder of the forecast.
  • In July, the OBR estimated a budget deficit – the gap between spending and tax income – of £322bn for 2020-21.
  • The OBR had previously estimated the national debt – the sum total of every budget deficit – of £2.2tn in 2020-21, or 104.1% of GDP.

Public sector pay

  • Pay rises for the public sector will be paused next year, with an exemption for more than 1 million nurses and doctors in the NHS.
  • 2.1 million public sector workers who earn below the median wage of £24,000 will be guaranteed a pay rise of at least £250.
  • Sunak says he cannot justify a significant across-the-board pay increase for public sector workers, to protect public sector jobs and ensure fairness between the public and private sectors.
  • The national living wage will be increased to £8.91 an hour and extended to over-21s.
  • Overall unemployment is forecast to peak next year at 7.5%.

Departmental spending

  • The day-to-day departmental spending will rise in real terms by 3.8%, the fastest growth rate in 15 years, in cash terms, this will be an increase of £14.8bn on current levels.
  • The government will match EU funding for regional development after Brexit. Funding for communities to pilot programmes will be made next year.
  • The core health budget will grow by £6.6bn. The chancellor says this will help to hire 50,000 new nurses.
  • The schools’ budget will increase by £2.2bn.

Overseas aid

  • The government will cut the overseas aid budget to 0.5% in 2021, allocating £10bn at this spending review.
  • The intention is to return to 0.7% “when the fiscal situation allows”.
  • The chancellor says during a “domestic fiscal emergency” sticking rigidly to spending the international commitment of 0.7% on overseas aid is difficult to justify to the British people.


  • Sunak says investment in infrastructure will total £100bn next year, with plans to deliver the highest levels of sustained investment in 40 years.
  • He confirms plans to launch a new infrastructure bank, to be headquartered in the north of England.
  • The chancellor announces a new £4bn fund for “levelling up”, to which any local area can bid for the funding of local projects.

Posted on Nov 25, 2020.

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