In addition, the economy could be affected by a reduction in consumer spending and lower business investment, largely reflecting the response to measures to contain the outbreak, and weaker demand for UK exports. The fundamentals of the UK economy are strong and the government is well prepared to protect people’s health and support their economic security throughout this period of temporary economic disruption. The Budget sets out a plan to support public services, individuals and businesses that may be affected by COVID-19. This document sets out the distributional impact on households of tax, welfare and public service spending decisions announced since Spending Round 2019, including those announced at Autumn Budget and Spending Review 2021. It also presents analysis of the wider economic context, focusing on trends in the household incomes and labour market – this includes estimates of the distribution of economic support provided to households in response to COVID-19. Test and Trace Support Payment – In September the government announced that all eligible people in England told to self-isolate due to COVID-19 would receive a one-off payment of £500.
- The Office for National Statistics (ONS) estimates that the UK economy grew by 1.4% in 2019, 0.1 percentage points higher than in 2018.
- Having rebuilt the strength of the public finances over the previous decade, and underpinned by the UK’s strong institutional framework, the government has been able to borrow to provide a comprehensive package of support for the economy.
- On 22 February 2021, the government announced additional funding, including a further £20 million per month for discretionary payments will be made available from March 2021 and expanded the scheme to cover parents who are unable to work because they are caring for a child who is self-isolating.
- To boost that investment the government will increase the rate of R&D tax credits and consult on widening the definition of qualifying expenditure to include data and cloud computing.
It has been designed to support those who are long-term unemployed to find work, and to ensure that those with long-term sickness or disabilities are better equipped to manage their conditions and participate in work, if they are able to do so. As set out in Box 1.C, best practice fiscal management requires transparency about the government’s potential obligations. Table 1.2 provides an update on all new significant contingent liabilities taken on since the last update at Spring Budget 2023. The expected loss of these contingent liabilities is £1.3 billion, of which £1.1 billion supports the Government of Ukraine through World Bank guarantees.
Improving public sector productivity
Businesses are the backbone of our economy, and significant further support confirmed at the Budget will help the economy bounce back once restrictions are lifted. The Budget builds on the government’s existing support, which has helped to limit lasting damage while strengthening the economy in the longer term. Including measures announced at Budget 2020, total support for the economy comes to £407 billion this year and next year – the largest peacetime support package for the economy on record.
A The chart does not include fiscal expansion measures proposed in EU countries’ draft plans for Next Generation EU financing. In its January 2021 Fiscal Policies Database, the IMF states that fiscal expansion from these sources will comprise 3.8% of EU GDP in total with certain countries, including Spain and Italy, expected to receive substantial funding that will supplement the fiscal expansion measures presented in the above chart. On top of substantial UK-wide support, such as CJRS, the government has funded the devolved administrations to provide their own support schemes in Scotland, Wales and Northern https://1investing.in/law-firms-pwc/ Ireland. Since the start of the pandemic the devolved administrations have received a total of nearly £19 billion through the Barnett formula, on top of their Budget 2020 baseline funding. International comparisons of real GDP should be made with care at present because differences in the methods used by national statistical institutes have been exacerbated by the pandemic. The impact of COVID-19 on nominal UK GDP since the start of the pandemic has been broadly in line with that of other advanced economies, reflecting relatively strong government spending and relatively weak consumer spending.
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The UK will take a different approach, continuing to build a positive environment for investment via cross-cutting measures such as full expensing, supported by targeted funding where justified to bolster the UK’s attractiveness as a place to start, grow and invest in manufacturing businesses. Lord Harrington’s Review has been published alongside the Autumn Statement.[footnote 141] The government has responded and accepted in principle his headline recommendations.[footnote 142] A new Ministerial Investment Group will be established, tasked with driving the government’s ambition on investment. This will be backed by additional resource and an improved toolkit for the What financial ratios are best to evaluate for consumer packaged goods? Office for Investment, allowing it to deepen its world-class concierge offer to strategically important investors. It is partly as a result of these measures that growth has been stronger than expected this year, as resilient real incomes, in aggregate, supported consumption. Inflation has more than halved from its 2022 peak, though remains too high.[footnote 92] The government continues to support the Monetary Policy Committee (MPC) in its action to bring inflation down to the 2% target by keeping borrowing under control. The government announced a wide-reaching package at Spring Budget 2023 including reforms to help those with disabilities and health conditions.
Provision of high-quality Occupational Health (OH) is important for helping employees with disabilities and long-term health conditions to stay in work. Following the recent consultation, the government will meet employers’ requests for clearer guidance and support by establishing an expert group to develop a new voluntary OH framework in Great Britain.[footnote 88] The full consultation response outlines further detail. The government will also work with employers and business representatives to develop and promote best employment practices for employees with health and disability issues. At Autumn Statement, the government builds on this through its Back to Work Plan, which includes investment of over £2.5 billion over the next five years, and which will significantly expand available support and transform the way people interact with the benefits system.
44 Financial transactions, asset sales and other decisions
Housing infrastructure allocations – The Budget confirms allocations from the Housing Infrastructure Fund totalling £1.1 billion for nine different areas, including Manchester, South Sunderland and South Lancaster. These successful bids will Classified Balance Sheet Financial Accounting unlock up to 69,620 homes and will help to stimulate housing and infrastructure growth across the country. The Budget also announces additional housing investments in York Central, Harlow and North Warwickshire totalling £328 million.
Statutory Sick Pay (SSP) Rebate Scheme – Small and medium-sized employers across the UK will continue to be able to reclaim up to two weeks of eligible SSP costs per employee. This scheme is a temporary COVID-19 measure intended to support employers while levels of sickness absence are high. As with other business support schemes, the government will set out steps for closing this scheme in due course.