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2020 Spending Review

2020 Spending Review

The UK economy will shrink 11.3% this year, the biggest decline for more than 300 years, Chancellor of the Exchequer Rishi Sunak said in his Spending Review.

He said that the total spend on Covid-19 so far has been £280 billion, stressing the health emergency is not yet over and the economic emergency had “only just begun”. He has put aside another £55 billion to spend on supporting public sector services next year.

Unemployment in the second quarter of 2021 is predicted to rise to 2.6 million (7.5%), but there is hope it will fall to 4.4% by 2024.

There will not be pay rises in the public sector next year, apart from for NHS workers. The exception here is those on lower incomes – the 2.1 million public sector workers who earn less than the median wage of £24,000 will be guaranteed a pay rise of at least £250.

Taking the recommendations of the Low Pay Commission, there will an increase in the National Living Wage next year by 2.2% to £8.91 an hour – extended to those aged 23 and over. Sunak explained that in the six months to September, private sector wages fell by nearly 1% compared with 2019, while at the same time public sector wages rose by almost 4%.

Other announcements include

  • Local authorities have been given “extra flexibility” to raise money for social care through council tax and the Adult Social Care precept. Sunak promised the extra £1 billion social care grant provided this year will be maintained into next year.
  • Foreign aid will be cut to 0.5% of national income in 2021.
  • A new National Infrastructure Bank, to be headquartered in the north of England, will help finance projects from next Spring.
  • As part of the government’s £5 billion commitment to support those hardest-to-reach areas, the government has put aside £1.2 billion to subsidise the rollout of gigabit-capable broadband.

There is very little here to indicate the impact of Brexit, so we have to conclude the obvious – it will either make it better or worse. We remain confident however, that even with all the bad news there are growth opportunities both in the UK and globally.


Coronavirus and Our Service – Update 19/07/21. With the government announcing the removal of most Covid restraints, we felt it important to reassure our clients that our commitment to you is unchanged. Read more