COVID-19: United Kingdom to borrow £394bn to increase doctors' pay, tackle recession

Clay Curtis
November 26, 2020

The overseas aid cut was announced by Chancellor Rishi Sunak as one of a number of measures meant to help cope with the economy contracting by an expected 11.3% this year.

But he warned of "long-term scarring" to the United Kingdom economy from the pandemic.

That is "a matter for the government", Mr Hughes said.

"The Executive's budget for everyday spending on public services stands still while capital investment needed to kick-start an economic recovery only increases marginally", he added.

"[Yesterday's] Spending Review put aside a welcome £257 million for walking and cycling in 2021/22 alongside more funding for local road maintenance", said Brice.

For capital, there would be £1.6bn, compared to £1.5bn the year before.

Trade unions also reacted with anger at the spending review announcement.

"Also, as we look to the future, businesses will need further significant incentives for investment in their people and productivity to ensure that they are well placed to recover and grasp any new opportunities as they occur".

Attempting to justify the pay freeze for non-NHS public-sector workers, Mr Sunak said that private-sector wages had fallen by almost 1 per cent in the six months to September while public-sector wages had risen by almost 4 per cent.

Rehana Azam, national officer of GMB, said her union would fight against the freeze.

In a statement to lawmakers, Treasury chief Rishi Sunak said that the target to allocate 0.7% of national income to overseas aid will be cut to 0.5%.

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"While Stormont has been spending unprecedented amounts of public money during the pandemic, budgetary pressures on the horizon loom large".

"Our health emergency is not yet over and our economic emergency has only just begun", he said.

"The third emergency, the fiscal one, will be tackled last".

"If those change significantly over time and move up, that would cost us more money and that's something that would obviously be hard", Sunak told radio station LBC.

Over a million nurses, doctors and others working in the NHS will get a rise but increases for the rest of the public sector will be "paused" - except for 2.1 million workers earning below the median wage of £24,000, who will receive at least £250 extra.

The dire state of the public finances means an estimated 1.3 million public sector workers will see their pay frozen while the overseas aid budget is being slashed by billions of pounds - prompting the resignation of Foreign Office minister Baroness Sugg.

The Welsh economy is not quite so reliant on the public sector as it once was.

The Chancellor said: "Our health emergency is not yet over".

The hit to the economy from coronavirus is twice the size of the financial crisis in terms of its impact on the economy and the public purse, he said.

"Even with growth returning, our economic output is not expected to return to pre-crisis level until the fourth quarter of 2022".

Sunak warned that the pandemic's cost will create long-term "scarring", with the economy 3% smaller in 2025 than predicted in the budget in March.

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