Budget 2021: The economy and headline figures
The 2021 Budget took place on 3 March 2021. Chancellor Rishi Sunak announced that, as a result of the Covid-19 crisis, GDP shrank by 9.9% in 2020, the largest annual fall in 300 years according to a Bank of England report, albeit lower than the 11.3% forecasted in November. However, the Office for Budget Responsibility (OBR) expects that the economy will recover quickly once the current restrictions are lifted.
In fact, the OBR expects that recovery to pre-crisis levels will be around six months earlier than was predicted in the November 2020 forecast.
In terms of annual borrowing, the figure for 2020/21 reached 16.9% of GDP (£355 billion), which is the highest level of peacetime borrowing on record. This is forecast to fall to 10.3% (£234 billion) in 2021/22, and to 2.8% (£74 billion) by 2024/25.
Underlying national debt (which excludes amounts owed to the Bank of England) is forecast to peak at 97.1% for GDP in 2023/24 before starting to fall in 2024/25. However, the OBR points out that the cost of servicing this has fallen to a record low of 2.4% of total revenue due to the fall in interest rates.
Aside from the forecasts, the Budget was also expected to see a number of Covid-19 support measures extended, and details of the next phase of support announced following the government publishing its roadmap out of lockdown in February.