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The Chancellor of the Exchequer, Rishi Sunak, delivered the first budget since the 2019 election on 11 March 2020. The Office for Budget Responsibility (OBR) described it as the “largest sustained fiscal loosening” since 1992.

The budget contained a package of measures worth £12 billion to counteract threats from the coronavirus (COVID-19). These included a £5 billion fund for the NHS and specific policies to help individuals and businesses. In a coordinated move, the Bank of England also announced an emergency interest rate cut and moves to increase bank lending to businesses.

The Chancellor announced a series of changes to tax policy, which the OBR said would increase receipts by £5.5 billion per year on average. They included cancelling a planned cut in corporation tax, restricting entrepreneurs’ relief, and increasing the primary threshold for paying national insurance.

The budget announced a spending review, to conclude in July 2020, to set departmental budgets for forthcoming years. It also set overall totals for the review. It said that day-to-day spending would rise by 2.8% per annum in real terms between 2020/21 and 2023/24. Capital spending would increase by £27 billion per annum between 2020/21 to 2024/25. Increased spending covered a range of areas, including the NHS, infrastructure and investment and helping to meet the Government’s target of net zero greenhouse gas emissions by 2050.

Alongside the budget, the OBR published its latest forecasts for the economy and the public finances. These were finalised before the effects of the coronavirus, or the Government’s response to it, were known. The OBR said that the virus would “have a significant adverse effect on the economy and public finances” and stated that the published forecasts “could no longer be regarded as central”. Nevertheless, the OBR downgraded its forecasts for economic growth and increased its estimates of future public borrowing and the national debt.

Summarising, it said that the Government’s fiscal strategy “looks sustainable over the medium term” on current forecasts, but that the public finances “are more vulnerable to adverse inflation and interest rate surprises than they were”.

On 18 March 2020, the House of Lords is due to debate a motion moved by Lord Agnew of Oulton (Conservative) that “this House takes note of the economy in light of the budget statement”.

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