The UK’s Chancellor of the Exchequer, Rishi Sunak, presented the UK’s 2020 budget on March 11th. The budget sought to serve a dual purpose: fulfill the government's manifesto promise of increased funding for public services; and respond to the immediate challenges presented by the Coronavirus crisis.
According to the Institue for Fiscal Studies, the budget will increase the government's real spending by 9% between 2019-20 and 2023-24, meaning that public spending as a proportion of national income will rise to 41% by 2023-24. Additional government spending will largely be funded by increases in government borrowing. The budget is in line with the government’s own fiscal rules, based on forecasts from the Office of Budget Statistics (OBR). The OBR projected that the UK economy would grow by 1.1% in 2020, 1.8% in 2021 and 1.5% in 2022. However, these projections were undertaken before the full scale of the Coronavirus pandemic was anticipated and therefore are likely to be over-optimistic. Sunak has indicated that the government is considering relaxing the fiscal rules.
Announcements in the budget included an additional £22 billion (US$28.8 billion) a year for research and development by 2024-25, increasing direct government support for R&D to 0.8% of GDP. New funding mechanisms for public R&D will be outlined in the coming months. In response to the Coronavirus crisis, the government set aside an additional £12 billion (US$15.7 billion) for public services and businesses.
The UK Treasury is now undertaking a Comprehensive Spending Review (CRS) to define individual government departments' annual budgets for the next three years. This will be completed by July 2020 and will cover all departments including the Department for International Development.
UK Government – Budget 2020
News article - Institute for Government, The Guardian, Institue for Fiscal Studies