Challenges facing Chancellor ahead of spending review

Dr Rana said: “Despite the bounce back of the UK’s economy over the summer, the economy is still projected to shrink by around 10% this year. According to the IMF, the unprecedented fiscal actions taken in response to Covid-19 by governments around the world already amounted to $117 trillion, approximately 12 percent of global GDP.

“In the first seven months of the financial year, Britain has already borrowed a record total of £215 billion, the highest borrowing since World War II. In the words of the Chancellor: ‘the economy is experiencing significant stress’, especially the job market with three quarters of a million people having already lost their jobs and forecasts of more job losses to come.

“There is, unfortunately, no doubt of difficult times ahead for the economy.  However, the news regarding significant progress in the development of vaccines gives hope of a faster than expected return to normal activity if the distribution is not delayed and if additional outbreaks, requiring tougher restrictions, do not occur. Given the high uncertainty related to the current pandemic, Chancellor Sunak has sensibly decided to limit this year’s spending review to only one year, as opposed to a review that would have outlined plans for the remaining of this parliament.

“As in March, the Government has had to prioritise its immediate response to Covid -19 and its focus on supporting jobs. As largely anticipated, however, long term investment in sectors which are considered a “cornerstone of our society” and seen as essential to level up the country, such as the NHS, education and infrastructure also remain a priority. It will be an interesting balancing act for Rishi.”