The Chancellor has outlined new plans for Government spending in the face of the largest contraction in the nation's economy for 300 years, as a result of the Covid-19 pandemic.

Addressing the House of Commons this afternoon, Rishi Sunak declared that the UK's "health emergency is not over", and that its "economic emergency has only just begun".

He explained that, as a result of coronavirus, the national economy will contract this year by 11.3 per cent, "the largest fall in 300 years".

Mr Sunak said Covid-19 will leave "long-term scarring" in the UK's economy, explaining that the Office for Budget Responsibility's latest forecast predicted it will be three per cent smaller than expected in 2025 as a result of the widespread disruption created by the pandemic.

In the face of such disruption, Mr Sunak said his new spending review aimed to create jobs, grow the economy, and increase "pride in the place we call home" as he looked towards life beyond the Covid-19 pandemic.

Key among his announcements was a pay increase for more than 1m doctors, nurses and others working in the NHS, along with a pay rise for the 2.1m public sector workers who earn below £24,000, of at least £250.

The national living wage is also increasing by 2.2 per cent, to £8.91 an hour, for those age 23 and over.

There is also set to be an increase the national minimum wage.

To help "level up" areas across the country, a new £4bn fund will be created, for which "any local area will be able to bid to fund projects".

Mr Sunak said this would support a "new holistic place-based approach to local areas", and that any successful bid for the fund "must command local support".

The Chancellor also indicated an intention to increase the support given to the Borderlands project, a major funding deal seeking to drive economic growth across Cumbria, Northumberland and southern Scotland.

Also connected to the Government's "levelling up" agenda was Mr Sunak's announcement today of the creation of a new UK infrastructure bank, headquartered in the north of England.

This will preside over £100bn in infrastructure spending, and help to support the "highest sustained level of public investment in 40 years", he said.

Funding for schools will increase nationally by £2.2bn, meaning "every pupil in the country will see a year-on-year funding increase of 2.2%", Mr Sunak said.

Mr Sunak added that next year's core health budget will grow by £6.6bn.

He said this will allow the Government "to deliver 50,000 more nurses and 50 million more general practice appointments".