Updated: Mar 4
Chancellor Rishi Sunak has unveiled his Budget in the House of Commons.
The chancellor says he would do “whatever it takes” during the pandemic, and that he has done and will continue to do so.
Setting out the government's tax and spending plans for the year ahead, he announced new measures to help businesses and jobs through the pandemic and to support the UK's long-term economic recovery.
He says there has been acute damage to the economy, with more than 700,000 people losing their jobs, the economy shrinking by 10% – the largest fall in 300 years, and borrowing is highest it has been outside of wartime.
“It’s going to take this country, and the whole world, a long time to recover from this extraordinary situation,” he said.
The chancellor says the economy will recover more quickly from the pandemic than previously thought, with the economy returning to its pre-pandemic size six months earlier, by the middle of next year.
He says that in five years’ time the economy will still be 3% smaller than it otherwise would have been without Covid.
GDP will grow by 4% this year, according to official forecasts made by the Office for Budget Responsibility (OBR).
GDP will grow by 7.3% next year.
In November, the OBR said its “central scenario” was for GDP growth of 5.5% in 2021.
It comes after the economy shrank by 9.9% in 2020, the biggest fall since 1709.
Furlough to be extended until the end of September
Government to continue paying 80% of employees' wages for hours they cannot work
Employers to be asked to contribute 10% in July and 20% in August and September
Support for the self-employed also to be extended until September
600,000 more self-employed people will be eligible for help as access to grants is widened
£20 weekly uplift in Universal Credit worth £1,000 a year to be extended for another six months
Working Tax Credit claimants will get £500 one-off payment
Minimum wage to increase to £8.91 an hour from April
The chancellor confirms the £5bn restart grant for businesses to help companies get going after lockdown
He says total direct cash support to businesses has reached £25bn
As the government-backed bounce back loan (BBL) and coronavirus business interruption loan scheme (CBILS) come to an end, the Treasury is launching a new loan scheme to run until the end of the year. Loans can be between £25,000 and £10m.
Hospitality and leisure businesses pay no business rates for three months, then rates will be discounted for the remaining nine months of the year by two-thirds, in a £6bn tax cut
5% reduced rate of VAT will be extended until the end of September. Then it will be gradually increased, at 12.5% for six months, before returning to the standard rate from April 2022. Sunak says this is a cut worth £5bn
Environment, transport, infrastructure and housing
New UK Infrastructure Bank to be set up in Leeds
It will have £12bn in capital, with aim of funding £40bn worth of public and private projects
£15bn in green bonds, including for retail investors, to help finance the transition to net zero by 2050
In April 2023, the rate of corporation tax will increase to 25%. Sunak says this will be the lowest rate in the G7.
Sunak says businesses will only be impacted if they are making profits, and the change will only come in once the OBR forecasts the economy will be recovering.
The rate will be tapered so that only businesses with profits of more than £250,000 will be taxed at the full 25% rate; that means only 10% of companies will pay the full higher rate. Companies with profits of less than £50,000 will remain at 19%.
“It’s a tax rise on company profits, but only on the larger more profitable companies, and only in two years’ time,” Sunak says.
The government is investing £25bn by allowing a 130% super-deduction on tax for investments made by companies. This means firms can cut their taxes by up to 25p for every pound they invest.
The chancellor confirms the Treasury will establish an economic campus in Darlington, alongside the business, international trade, and housing and communities departments among others.
Sunak announces more than £1bn funding for 45 new “town deals” across the UK.
Freeports – special economic zones with different rules to make it easier and cheaper to do business – will be launched. They will include infrastructure planning, customs and favourable duties and taxes.
Sunak announces eight locations in England: East Midlands airport, Felixstowe and Harwich, Humber, Liverpool city region, Plymouth, Solent, Thames and Teesside.
The arts and sport
Nearly £400m to help arts venues in England, including museums and galleries, re-open
£300m recovery package for professional sport and £25m for grassroots football
£1.2m to help stage delayed Women's Euros football tournament in England in 2022