BUDGET caps will be brought in for Formula One teams for each of the next five seasons.

Governing body the FIA set the 2021 limit at US$145million (£117million), a significant cut from the initial plan to set the limit at US$175m.

But the FIA did not stop there, announcing the budgets would be cut further to US$ 140million in 2022, and US$135million for 2023-2025.

While it will require major sacrifices from the sport’s biggest teams, some of which are reported to have budgets in excess of US$200m, it should help the three teams with bases in Oxfordshire.

Williams, Renault and Haas have all made temporary cuts to help deal with coronavirus, which has prevented the season from starting.

Williams’ factory shutdown at Grove has now finished, with a limited number of staff being brought out of furlough to return while observing social distancing measures.

The budget cap was welcomed by Renault.

They tweeted: “Renault DP World F1 Team welcomes the adoption of the new regulations by the FIA World Motor Sport Council, which constitute responsible and appropriate responses to the short and long term challenges of Formula 1.

“These decisions, supported unanimously by teams with very differing strategies, honour the remarkable work of the FIA and Formula 1 and will strengthen the discipline in the long term.”

McLaren chief executive Zak Brown added: “This is a crucially important moment for our sport.

“F1 has been financially unsustainable for some time, and inaction would have risked the future of F1 and its participants, who are to be commended for resolving this issue collectively and determinedly.

“A uniform budget cap, in concert with more even distribution of revenue among the teams, will ensure greater competition and more people wanting to watch live and on TV, driving more sustained revenues to underpin the long-term financial health of the teams and the sport.

“Ultimately the fans win, and if the fans win, the whole sport wins too.”

Yesterday the Dutch Grand Prix, postponed in May, was officially cancelled.

It is hoped conditions will allow the season to begin in July.