Chancellor warns of 'economic emergency' in Spending Review as borrowing hits £394bn

Largest recorded borrowing level in peacetime

Rishi Sunak has warned that the UK's "economic emergency has only just begun", as he revealed that the Office for Budget Responsibility (OBR) has forecast the economy will contract this year by 11.3% - the largest fall in output for more than 300 years.

In his Spending Review for 2021-22, the Chancellor of the Exchequer announced that the UK is forecast to borrow £394bn - accounting for 19% of GDP, which is the highest recorded level of borrowing in peacetime history. But he added: "The cost of inaction would have been far higher." He revealed that the deficit will fall to £164bn next year and to £105bn in 2022-23. Market Movers Blog: Sunak to pledge £4.3bn to tackle joblessness Sunak said that the UK's economic output is not expected to return to pre-crisis levels until Q4 2022, and added that the "economic damage is likely to...