UK Chancellor Rishi Sunak raised the public spending by a massive GBP 150 billion in an effort to underpin a strong economic recovery after the crisis caused by the coronavirus pandemic.
That will be the largest increase this century, with spending growing by 3.8 percent a year in real terms by 2024-25, Sunak said in his autumn budget speech in the Parliament.
The chancellor said the latest budget began the work of preparing for a new economy post-Covid.
Headline inflation, which hit 3.1 percent in September, is set to rise further to average 4 percent over the next year, Sunak said citing official forecasts.
The chancellor blamed the global supply chain disruptions and surging energy prices for the higher inflation.
The chancellor announced a new 50 percent business rates discount for businesses in the retail, hospitality, and leisure sectors.
Sunak revamped the alcohol duty and under the new system sparkling wines, fruit cider and draught beer would be cheaper.
He also canceled the planned rise in fuel duty. The National Living Wage would be raised by 6.6 percent or GBP 9.50 an hour next year.
The universal credit taper, which Sunak called a hidden tax on work, was cut from 63 percent to 55 percent.
Sunak raised the spending on health-care by GBP 44 billion to over GBP 177billion. Extra funding was also announced for social care, housing, childcare, schools, culture and skill-building.
The GBP 1 million annual investment allowance was extended to March 2023 and the 3 percent bank surcharge was retained.
The corporation tax rate on banks will, in 2023, increase from 27 percent to 28 percent, Sunak said.
Sunak extended the suspension of the heavy goods vehicle levy until 2023 and froze their vehicle excise duty.
The chancellor launched a GBP 500 million Household Support Fund to help with the cost of living.
Citing the forecasts from the Office for Budget Responsibility, Sunak said UK growth for this year was revised up from 4 percent to 6.5 percent.
The economy is then forecast to grow by 6 percent in 2022, and 2.1 percent, 1.3 percent and 1.6 percent over the next three years.
Unemployment is expected to peak at 5.2 percent, which means over 2 million fewer people out of work than previously feared, the chancellor said.
The OBR forecast underlying debt to be 85.2 percent of GDP this year, then 85.4 percent in 2022-23, before peaking at 85.7 percent in 2023-24.
Borrowing as a percentage of GDP is projected to fall in every single year, from 7.9 percent this year to 3.3 percent next, eventually to 1.5 percent over the forecast period.