Within his Budget speech, Chancellor Rishi Sunak unveiled billions in financial support for businesses and families adversely affected by the coronavirus (COVID-19) pandemic.
The Chancellor confirmed the extension of a number of COVID-19 support schemes, including the Coronavirus Job Retention Scheme (CJRS), which will now run until September, and the Self-employment Income Support Scheme (SEISS), which will continue with a fourth and fifth grant.
In its Budget report, the Office for Budget Responsibility (OBR) revealed that the UK economy is expected to recover to its pre-pandemic size six months earlier than previously anticipated, with expected growth of 4% this year.
The OBR expects the pace of UK economic growth to increase to 7.3% in 2022. However, it also stated that the pandemic is nevertheless still expected to lower the supply capacity of the economy in the medium term by around 3% relative to pre-COVID-19 expectations.
As the UK economy re-opens and COVID-19 fiscal support is withdrawn, the OBR revealed that government borrowing is forecast to fall from a high of £355 billion (16.9% of GDP) in 2020/21 to £234 billion (10.3% of GDP) in 2021/22. In 2022/23, as fiscal policy moves from rescue to recovery, the deficit is predicted to fall back to £107 billion.