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Pandemic causes ‘worst economic hit to UK in 300 years’

UK \'faces worst economic hit in 300 years\' with effects to last years
The economic effects from the coronavirus pandemic could last years (Picture: Getty Images)

There are fears the UK economy could still be reeling from the coronavirus pandemic in 2024.

The annual spending review is expected to reveal the country is facing potentially its worst economic performance in 300 years, as the economy will contract by almost 11% overall in 2020.

Chancellor Rishi Sunak is likely to publish forecasts showing the country’s economy would still be recovering by the time of the next general election in 2024, according to the Financial Times.

He will base his predictions on previous Office for Budget Responsibility and Bank of England statements.

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Despite this news, the Prime Minister is set to unveil a £16.5 billion increase in defence spending in what is being billed as the biggest programme of investment in Britain’s armed forces since the end of the Cold War.

The huge cash boost will pay for a ‘space command’ capable of launching the UK’s first rocket by 2022 and the creation of an agency dedicated to artificial intelligence.

The money will be spread over four years and create 10,000 new jobs in Britain.

‘I have taken this decision in the teeth of the pandemic because the defence of the realm must come first,’ Boris Johnson said in a statement ahead of the announcement.

epa08421877 Pedestrians walks past a closed shop in London, Britain, 14 May, 2020. Britain's economy has suffered a two per cent fall, its worst decline since the 2008 financial crash. Countries around the world are taking measures to stem the widespread of the SARS-CoV-2 coronavirus which causes the COVID-19 disease. EPA/ANDY RAIN
The economy is expected to contract by almost 11% overall in 2020 (Picture: EPA)
Chancellor of the Exchequer Rishi Sunak places an Eat Out to Help Out sticker in the window of a business during a visit to Rothesay on the Isle of Bute, Scotland. PA Photo. Picture date: Friday August 7, 2020. See PA story POLITICS Coronavirus Sunak. Photo credit should read: Jeff J Mitchell/PA Wire
Rishi Sunak launched the Eat Out to Help Out scheme over the summer to help boost the economy (Picture: PA)
A pedestrian wearing a face mask as a precaution against the transmission of the novel coronavirus walks past a closed down shop space advertised to let in east London on October 13, 2020. - Britain's unemployment rate has jumped to 4.5 percent as the coronavirus pandemic continues to destroy jobs, official data showed on October 13. (Photo by JUSTIN TALLIS / AFP) (Photo by JUSTIN TALLIS/AFP via Getty Images)
There are fears the economy could still be reeling from the coronavirus pandemic in 2024 (Picture: AFP via Getty Images)

‘The international situation is more perilous and more intensely competitive than at any time since the Cold War and Britain must be true to our history and stand alongside our allies.

‘To achieve this we need to upgrade our capabilities across the board.

‘This is our chance to end the era of retreat, transform our armed forces, bolster our global influence, unite and level up our country, pioneer new technology and defend our people and way of life.’

But it is thought the plans were being resisted by the Treasury, with Mr Sunak calling for a one-year deal instead.

But the move will come as a relief for military chiefs who have been pressing for a multi-year settlement to enable them to plan effectively for the future.

Defence Secretary Ben Wallace said: ‘This is excellent news for defence, and provides us with the financial certainty we need to modernise, plan for the future and adapt to the threats we face.’

Labour’s shadow defence secretary John Healey said: ‘This signals a welcome and long overdue upgrade to Britain’s defences after a decade of decline.

‘Since 2010 the size of the armed forces has been cut by a quarter, defence spending was cut by over £8 billion and the defence budget has a £13 billion black hole.’

Get in touch with our news team by emailing us at webnews@metro.co.uk.

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