The UK is recovering faster than its major competitors from Covid, the chancellor tells MPs. Opening his 2021 Budget, Rishi Sunak talks about the direction of employment, investment, public service, wages and debt levels. He says there are “challenging months ahead”, but his Budget sets out a plan, for a "new economy, post-Covid".

Rishi Sunak says he has made "four fiscal judgements" in this Budget.

He says the fiscal situation in the UK is between four to six times more "sensitive" than it was before the pandemic, so forecasts have been adjusted.

Secondly, he says he wants to continue to help working families.

Thirdly, he says he wants to meet obligations to the world's poorest people. He says if recovery is strong, then the government will be able to return to spending 0.7% of GDP on overseas aid by 2024.

And finally, he says spending is growing by 3.8% a year in real terms. Contrary to speculation, he says, there will be a real terms increase in spending for every government department.

"The conservatives are the real party of public services," he says.

Rishi Sunak says the Office for Budget Responsibility (OBR) has revised up its forecasts for UK economic growth.

The OBR now expects gross domestic product (GDP) to expand by 6.5% this year compared to the 4% it forecast at the Budget in March. This is below what the Bank of England expects - it is predicting 7.4% growth.

Still, it means that recovery from the depths of the pandemic is faster than expected.

Chris Mason
Political Correspondent

The most striking thing so far is the chancellor's focus on prices - inflation.

It's not been a thing in the national conversation, and in our politics, for ages.

But it's back - and it could shape much of the debate in the coming months.

Rishi Sunak has said higher prices will last past Christmas, rather longer than ministers have suggested recently.

The costs of living are likely to be a big deal through the autumn and winter.

Image source, PA Media

Sunak has moved on to Office for Budget Responsibility (OBR) forecasts about the state of the economy.

He says the OBR expects unemployment to peak at 5.2% - which means "over two million fewer people out of work than previously feared".

That's "because of the actions we took to support our economy" during the pandemic he says.

Ministers have been "more successful than previously feared in preventing the long-term economic damage of Covid" he adds.

Next Sunak addresses rising inflation, saying it hit 3.1% and is likely to rise further.

He puts it down to global factors of the world opening up after the pandemic and demands for goods increasing.

"But where the government can ease these pressures, we will act," he says, announcing new funding to improve lorry park facilities.

"We’ve already suspended the HGV levy until August and I can do more today extending it for a further year until 2023, and freezing Vehicle Excise Duty for heavy goods vehicles."

He reveals he has written to the governor of the Bank of England today "to reaffirm their remit to achieve low and stable inflation".

Sunak adds: "People should be reassured [as] they have a strong track record in doing so.

"I understand people are concerned about global inflation – but they have a government here at home ready and willing to act."

Sunak says the Budget does "not draw a line under Covid" and warns of challenging months ahead.

But he says it does begin the work of preparing for a new economy after the pandemic.

The chancellor says it will be "an economy fit for a new age of optimism - where the only limit to our potential is the effort we are prepared to put in and the sacrifices we are prepared to make".

He adds: "That is the stronger economy of the future. And this Budget is the foundation."

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The chancellor opens his big speech by acknowledging the pre-briefing to the media before the Budget, saying he has listened "very carefully" to the Speaker's concerns.

After sending his best wishes to Sir Keir Starmer, he then begins his speech properly, saying: "Employment is up, investment is growing, public services are improving, public finances are stabilising and wages are rising."

Sunak promises his Budget will deliver a "stronger economy for the British people" and leave them in "no doubt" the government's plan is working.

Along with broad pledges on a high skilled economy and world class public services, he also makes his first mention of the phrase "levelling up", saying it is the "birth right of every child in an independent and prosperous United Kingdom" to succeed.

Chris Mason
Political Correspondent

The focus of Westminster today is the Budget, but PMQs reminded us of what's to come after all the number-crunching and headline-writing of the next few days.

The COP26 summit is a big deal and it is imminent.

Ed Miliband picked his specialist subject, climate, to pick away at what the PM hopes to achieve.

Chris Mason
Political Correspondent

Rishi Sunak's big day starts with a rollocking from the Deputy Speaker, Dame Eleanor Laing.

You have announced too much of it already, she tells him - you should save it for MPs first.

She then adds she looks forward to hearing "the remainder of your announcements". Ouch.

After the twists and turns of the PMQs, now we are onto the main event - Chancellor Rishi Sunak has taken to the dispatch box to deliver his Budget.

Stay with us for all the updates and analysis...

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Most of the Conservative front bench were wearing mask at PMQs, which has now finished.

Earlier in the week Health Secretary Sajid Javid said wearing a mask was a matter of "personal choice" for his parliamentary colleagues - contrary to previous remarks.

Commons Leader Jacob Rees-Mogg last week said Conservatives did not need to do so because they knew each other well, and this meant they were complying with government guidance.

Rishi Sunak is due to give his statement any minute now.

Robert Cuffe
BBC head of statistics

The Spending Review - which, alongside the Budget, follows PMQs - will tell government departments how much they can spend for the next three years.

While health has been a big winner in recent years, taking up more and more of government day-to-day spending, many departments are still seeing tighter budgets than they did when the Conservatives came to power in 2010.

The Institute for Fiscal Studies calculates that the education budget is slightly smaller than it was in 2010 once the effect of rising prices has been taken into account.

The Foreign Office and Ministry of Justice budgets are substantially smaller and they will be hoping that they see some increases from the chancellor.

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SNP Westminster leader Ian Blackford raises the situation in Afghanistan, where many children face "acute malnutrition".

"People are dying and need our help," he says, so what exactly is the government doing to "end the famine" there?

The PM says he is "proud" of what the UK has done to welcome people from Afghanistan to this country.

He says the UK's aid commitment for this year has been doubled and it is working with aid agencies to help people there.

But he says the government cannot "write a completely blank cheque to the Taliban" as it wants to make sure the country's new rulers do not slip back in to terrorism.

In his final question, Ed Miliband makes one more attack on the prime minister, saying he has to understand that the upcoming COP26 climate summit in Glasgow "is not a glorified photo opportunity [but] a fragile and complex negotiation - and booster-ism won't cut carbon emissions in half".

He adds: "In these final days before COP26, we need more than warm words, and above all, Glasgow has got to be a summit of climate delivery, not climate delay."

Johnson insists cutting CO2 in half is "virtually what this government has done".

He says the "sensible, pragmatic, Conservative" vision he is pursuing cut carbon emissions by 40% since 1990.

And he claims the government's net zero plan - to reach net zero greenhouse gas emissions by 2050 - will deliver 440,000 jobs.

"That what the country wants to see," he concludes.

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Miliband says the PM has cut the aid budget and abandoned the "bipartisan belief" in it - from parties on both sides of the House of Commons.

The PM has done a trade deal with Australia but allowed that country to bypass its environmental commitments, he says, undermining "his own COP presidency by saying one thing and doing another" he says.

Johnson says the government is absolutely committed to tackling climate change around the world - "it is rock solid".

Miliband says what COP 26 will need is "statesmanship not partisanship".

He then asks about climate finance for developing countries - saying the £100bn commitment to help the world has not been delivered after a decade.

He asks whether the government's cut to the foreign aid budget has made it even harder to deliver.

Johnson says the first thing he did as PM was to make a £11.6bn commitment to helping the developing world tackle climate change.

"We have a way to go, whether we will get there or not I don't know, it is in the balance," he adds.

Just a reminder: Rishi Sunak's Budget statement follows PMQs, which is scheduled to finish at 12:30 BST.

Chris Mason
Political Correspondent

A flashback moment.

Ed Miliband is doing Prime Minister's Questions.

The last time this happened was 25 March 2015, before he lost the general election to David Cameron.

The Labour leader Sir Keir Starmer has Covid, so it's last minute stand in time.

Miliband jokes that he could reassure MPs on both sides of the House that this is a one-off for him.

Spare a thought for the shadow chancellor, Rachel Reeves.

One of the most difficult jobs in politics - responding to a Budget for the Opposition immediately after it's been delivered - usually falls to the Leader of the Opposition.

But with very limited notice, it will now be Rachel Reeves getting to her feet when Rishi Sunak sits down later.

Miliband says it is easy to make promises for 30 years' time but much harder to act now.

He says the PM must not "shift the goalposts" before the Glasgow summit and just focus on longer term goals.

The PM says the focus is on 2030 and "the commitments are coming through".

It is right to keep the pressure up, he says, but you also have to be practical.

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The former Labour leader carries on his questioning - he applauds the UK's efforts in leading the COP26 meeting, but wants to talk about the current decade.

Miliband points to a UN report which warns "far from halving global emissions this decade, we are only on course to reduce them by 7.5%".

He asks if the PM acknowledges how far away we are from the action required?

Johnson says: "Indeed I do", but calls on Miliband to recognise the progress made.

"And every day solid commitments are coming from countries [on carbon emissions]," he adds.