Within his Budget speech, Chancellor Rishi Sunak announced the government’s intention to create high-wage, high-skilled jobs of the future.
The Chancellor stated that the Budget and Spending Review will continue supporting people into work, with over £6 billion of funding for the Department for Work and Pensions (DWP) over the next three years to help people earn more and gain the right skills.
Additionally, in its latest report, the Office for Budget Responsibility (OBR) altered its prediction for economic growth in 2021 to 6.5% – a significant rise when compared to its previous forecast of 4%. The OBR also expects unemployment to rise only modestly to 5¼% this winter.
Meanwhile, the OBR has reduced its estimate of the scarring effect on the UK economy caused by the coronavirus (COVID-19) pandemic from 3% to 2%. It stated that the vaccine roll-out has permitted the economy to re-open ‘largely on schedule’, despite continuing high COVID-19 infection rates.
Output in 2021 has recovered faster than the OBR had expected at the time of the last Budget in March, helping to boost tax revenues. The strong recovery has also helped to reduce the cost of pandemic-related support, the OBR found.
Nominal GDP has also been revised up by 4.1% for 2025/26, relative to the figures announced in March.