Budget 2021: UK economy set to return to pre-Covid…

Budget 2021: UK economy set to return to pre-Covid level 'by middle of next year'

The UK economy is expected to return to its pre-Covid level by the middle of next year, Chancellor Rishi Sunak announced today - 6 months earlier than previously thought.

Announcing his Budget, the Chancellor said the Office for Budget Responsibility now expect the economy to be 3% smaller than it would have been otherwise in five years’ time.

But he said the OBR now expect the economy to rebound faster than previously thought in November.

Mr Sunak said more than 700,000 people have lost their jobs since March and the economy has fallen by more than 10% - the fastest fall in more than 300 years.

“It’s going to take this country and the whole world a long time to recover from this extraordinary economic situation,” he said.

The figures are an extraordinary change from the economic projections that were announced in the last Budget just a year ago.

Speaking to a packed Commons chamber in early March 2020, just as Covid swept through the UK, Rishi Sunak had claimed debt would be around 75% of GDP until 2024.

That was before government borrowing surged to commit £280billion of spending to tackling the coronavirus pandemic - a figure that today rose to £352bn.

Ahead of today's Budget, Mr Sunak told the Cabinet borrowing was on an “extraordinary scale” but the Government will “rise to that challenge and we can be optimistic about the recovery”.

Mr Sunak told the Cabinet borrowing was on an “extraordinary scale”, like in wartime (Empics Entertainment)

The Chancellor "said we must be honest with ourselves and the country about what that has meant", Downing Street said.

"We are borrowing on an extraordinary scale – equivalent only to wartime levels. He said that, as a Conservative Government, we know that we cannot ignore this problem and it wouldn’t be right or responsible to do so."