Britain will borrow tens of billions more over the next five years to fund a “significant” rise in public spending.
The Office for Budget Responsibility (OBR) said extra spending on government departments and investment represented the biggest Budget giveaway since 1992.
It said borrowing would climb to a six-year high by 2022 to fund the splurge.
The chancellor also unveiled an extra £30bn in spending for this year, including measures aimed at helping the economy cope with the coronavirus.
This includes £7bn to support workers and businesses affected by the coronavirus and at least £5bn to help the NHS cope with the outbreak.
As well as this, Rishi Sunak also announced additional spending of £18bn “to support the economy this year”.
More on Budget 2020
The UK’s economy is also expected to grow at the slowest pace since the financial crisis this year, according to the government’s spending watchdog, which cut its 2020 growth forecast to 1.1%.
This would be the weakest performance since 2009, and does not take into account any hit from the coronavirus.
A year ago, the OBR predicted the UK economy would grow by 1.4% this year.
The OBR said the government would borrow around £100bn more over the next five years than it forecast a year ago to fund “significant increases” in day-to-day spending and investment.
The spending in this Budget is being largely paid for with a big increase in government borrowing.
Big increases in borrowing
The government expects to borrow almost £100bn more in this Parliament (before mid-2024) than was expected the last time we had any forecasts.
And that figure does not include £12bn to be spent on getting the economy through the coronavirus outbreak.
The Treasury documents say that money will be accounted for in the next Budget in the autumn.
Mr Sunak said a weaker global backdrop would drag down UK growth.
The economy is expected to rebound in 2021 with the help of a big government spending boost
Growth is forecast to rise to 1.8%, before moderating to 1.5% in 2022 and 1.3% the following year.
However, the forecasts were made before the extent of the coronavirus outbreak in the UK became clear.
They do not take into account the emergency government stimulus measures or the cut in UK interest rates announced earlier on Wednesday.
Fighting the virus
There are currently 456 cases of the virus in the UK, and this number is growing.
Mr Sunak said the coronavirus outbreak would have a “significant impact” on the economy.
But he also said extra spending and investment would provide “security today” and “prosperity tomorrow”.
Mr Sunak unveiled a three-point plan to tackle the coronavirus, including:
- Providing the NHS with unlimited financial resources to fight the virus
- Extending sick pay benefits to healthy people forced to self-isolate as well as the UK’s five million self-employed
- Pledging to foot the sick pay bill for any business employing less than 250 people for up to 14 days, and scrapping business rates for small firms.
Mr Sunak warned that the coronavirus would hit spending and trigger a temporary disruption to the economy.
He warned that a fifth of Britain’s workforce could be off at any one time.
Mr Sunak said the government would do “everything we can to keep this country and our people healthy and financially secure”.
While public borrowing is forecast to be lower this financial year than predicted last March, the deficit is then projected to rise sharply.
The government is predicted to borrow £54.8bn in the coming financial year to plug the gap between the money it spends on public services and the tax revenues it collects.
This is much higher than the £40.2bn forecast last year.
This will rise to £66.7bn in 2021-22, from a previous forecast of £37.6bn.