Rishi Sunak ignores small business and self-employed in Spending Review

Daniel Fowler
November 26, 2020

UK Chancellor of the Exchequer Rishi Sunak has said the Covid-19 crisis caused the government to row back on its election promise not to cut foreign aid.

The UK economy, which tanked into a historic recession owing to pandemic fallout, was forecast to rebound by 5.5 per cent next year and by 6.6 per cent in 2022.

UNIONS intensified their threat of industrial action today after the government confirmed a "divide and rule" pay freeze for millions of public-sector workers.

Mr Cameron, who was responsible for enshrining the 0.7% commitment in law, said the Government's decision was a "very sad moment".

Sunak said the fiscal damage of the pandemic was "likely to be lasting" and cited figures from the OBR that predicted unemployment to peak at 7.5 percent, or 2.6 million people, in the second quarter of 2021.

"The UK is forecast to borrow a total of 394 billion pounds this year, equivalent to 19% of GDP, the highest recorded level of borrowing in our peacetime history".

"During a domestic fiscal emergency, when we need to prioritise our limited resources on jobs and public services, sticking rigidly to spending 0.7% of our national income on overseas aid is hard to justify to the British people, especially when we are seeing the highest peacetime levels of borrowing on record", Sunak said in a speech to parliament. "But this situation is clearly unsustainable over the medium term".

Speculation is growing that with United Kingdom debt soaring, Prime Minister Boris Johnson's Conservative government will either cut or suspend Britain's commitment to spend 0.7 percent of national income on foreign aid.

To fuel growth and support jobs, he said that Britain is estimated to spend 100 billion pounds (133.6 billion dollars) of capital expenditure next year on infrastructure.

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UK Chancellor Rishi Sunak said that with private sector pay falling amid the coronavirus pandemic and unemployment set to hit 2.6 million and public debt at nearly £400 billion, he could not justify an across-the-board pay rise for all state employees.

In his Commons statement on Wednesday, the Chancellor will announce the launch of a three-year Restart programme, worth £2.9 billion, which will help more than a million unemployed people get back into work in the wake of the pandemic.

For those in work, the national living wage will increase by 2.2% to £8.91 an hour - lower than the £9.21 rate previously expected from April 2021.

Unusually, because of the economic uncertainty caused by the virus, most Government departments will only receive a one-year spending allocation rather than the usual multi-year settlement.

Britain's government on Wednesday announces its spending plans for the next year amid soaring debt to support the virus-ravaged economy and as the nation embarks on its post-Brexit future.

Nurses, doctors and others in the NHS will get a pay rise, but for the rest of the public sector, any increase will be paused, affecting firefighters, teachers, the armed forces, police, civil servants, council and Government agency staff.

Philip Davies said people in the "real world" would support the cut, adding: "I suspect that the vast majority of the British public won't be asking why has he [Mr Sunak] cut so much, they will probably be asking why are we still spending so much". She said it undermines Johnson's efforts to promote a "Global Britain" in the wake of the country's departure from the European Union earlier this year.

Nobel laureate Malala Yousafzai has urged Britain not to cut overseas aid, ahead of a major announcement by the country's finance minister on Wednesday.

Johnson's government has repeatedly committed to maintaining the spending and his Conservatives made it a key plank of the election manifesto a year ago.

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