'Historic' infrastructure spending in UK budget

The government pledges the highest level of infrastructure since shortly after World War II, as the Bank of England cuts interest rates in a bid to help the UK economy during the coronavirus outbreak.

Man holding a budget box (UK) while wearing Union Jack glove

David Sapsted

11 March 2020

An "historic" investment of more than £600 billion over the next five years in UK infrastructure and innovation was outlined on Wednesday as Chancellor of the Exchequer Rishi Sunak presented his first Budget to the House of Commons.

The Budget: UK roads, railways, broadband and housing to benefit

The government pledged the highest level of investment for 65 years in the UK's roads, railways, broadband and housing with the emphasis on spending outside the affluent South East of England.The only shadow over the chancellor's speech was the ever-increasing threat from coronavirus, which Mr Sunak conceded could cause "temporary disruption" to the economy.He presented the Budget just hours after Mark Carney, governor of the Bank of England, announced an interest rate cut from 0.75% to 0.25%, a record low equalling that introduced after the 2008 financial crisis.

Coronavirus and the Budget: help for the NHS and SMEs

Mr Sunak said the government was doing "everything it can" to keep the UK "healthy and financially secure" as he announced fiscal stimulus of £30 billion to protect the National Health Service and boost the economy, with help for SMEs to offset the costs caused by the virus.Measures included a government commitment to cover the cost for businesses with fewer than 250 employees, of providing statutory sick pay and the introduction of a "temporary coronavirus business interruption loan scheme" enabling banks to offer loans of up to £1.2 million to small and medium-sized businesses.Mr Sunak also that in the coming year he would take the "exceptional step" of abolishing business rates for firms with rateable values below £51,000.

Office for Budget Responsibility predicts UK economic growth to fall

The Budget speech coincided with a report from the Office for Budget Responsibility (OBR), which predicted UK economic growth to fall to 1.1% this year, down from 1.2% last year and sharply lower than the OBR's previous forecast for 2020 of 1.4%.And Mr Sunak said the latest OBR forecast took no account of the likely impact of the coronavirus outbreak on the economy.But he added, "The OBR have said that today’s Budget will be the largest sustained fiscal boost for 30 years. Next year, day-to-day departmental spending will grow at the fastest rate in 15 years."Over the spending review period, it is set to grow at the fastest rate since 2004. An average growth rate in real terms of 2.8% - twice as fast as the economy. That means that by the end of the Parliament, day-to-day spending on public services will be £100 billion higher in cash terms than it is today."In other measures, the chancellor announced the establishment of Treasury offices in Scotland, Wales and Northern Ireland and open a new "economic campus" in the north with more than 750 staff.

£5 billion for broadband

He also said he was providing £5 billion to enable gigabit-capable broadband to be installed in the hardest to reach areas of the UK, and £510 million of new investment for the shared rural mobile phone network.Other announcements included spending of more than £27 billion in "the biggest ever investment in strategic roads and motorway" and an increase in research and development investment to £22 billion a year.Mr Sunak said £1.4 billion would be invested in the science institute at Weybridge, which is analysing samples of coronavirus, and more than £900 million in nuclear fusion, space and electric vehicles.He also announced a rise in the immigration health surcharge, from £400 a year to £624, with a discounted rate for children.