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BUDGET 2021: OBR highlights post-war peak in public spending

Total public spending is expected to rise by £256bn or 29% in 2020-21, the largest increase on record, according to the Office for Budget Responsibility (OBR).

Total public spending is expected to rise by £256bn or 29% in 2020-21, the largest increase on record, according to the Office for Budget Responsibility (OBR).

Public spending is expected to hit a post-war peak of 54.4% of gross domestic product (GDP) in 2020-21 but then drop as virus-related spending reduces.

The tax rises announced in the Budget increase the burden from 34% to 35% of GDP in 2025-26, which will be its highest level since Roy Jenkins was Chancellor in the late 1960s.

Business rates are expected to raise £18.1bn in 2020-21, down 42% on the previous year and £13.4bn billion lower than the OBR's March 2020 forecast.

Council tax is £800m a year higher than in the March 2020 forecast due to the Government's decision at the Spending Review to allow councils to increase council tax rates by up to 5% without calling a local referendum rather than the 2% that had been assumed.

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