No-deal would hammer economy, warns OBR as minister quits over foreign aid cut
Foreign Office minister quites in protest at cut in overseas aid budget
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Your support makes all the difference.Rishi Sunak has announced that the "economic emergency" caused by the pandemic has only just started, while a no-deal Brexit would make the blow even worse, according to the Office for Budget Responsibility (OBR).
The official forecaster warned that unemployment levels could reach 8 per cent, rather than the 7.5 per cent it currently predicts, if the UK does not reach a free trade deal with the EU.
The OBR also said that 2 per cent could be knocked off GDP growth without an agreement.
Among the major announcements in Wednesday’s spending review, Mr Sunak said that some public-sector workers would have their salaries frozen next year and that the overseas aid budget would be cut to 0.5 per cent of national income, a decision that was met with protest from the opposition benches.
The cut to the foreign aid budget led to the resignation of Baroness Suggs, a Foreign Office minister.
“I believe it is fundamentally wrong to abandon our commitment to spend 0.7% of gross national income on development. This promise should be kept in the tough times as well as the good,” she wrote in her resignation letter to the prime minister.
See what was our live coverage below.
UK borrowing leaps nearly seven-fold
This chart from Statista depicts how the pandemic has forced up the nation’s borrowing, which is forecast to rise nearly seven-fold. Mr Sunak said the UK was predicted to have the highest recorded level of borrowing in peacetime history.
Key spending review points at a glance
From the public-sector pay freeze to a record budget deficit, Jon Stone summarises today’s headlines from the spending review:
Key numbers and policies from Rishi Sunak’s spending review
The chancellor’s policies and updates at a glance
Lack of benefit statement ‘agonising’
Millions of families on Universal Credit are facing "agonising uncertainty" after the spending review did not address calls for benefit increases to be extended, charities have warned.
Since April, Universal Credit claimants were given a £20-a-week boost in response to the coronavirus pandemic. The temporary measure is due to end next April, with charities calling on the government to extend and even make permanent the welfare increase.
But Rishi Sunak did not address these calls, prompting disbelief from the shadow work and pensions secretary Jonathan Reynolds.
Stephen Timms , Labour chairman of the Work and Pensions Committee, said: “Millions of people on Universal Credit are now facing the Christmas period in agonising uncertainty, not knowing whether the government will cut their income by £20 a week next April.”
Biodiversity overlooked by Sunak, say green experts
Conservationists say they are disappointed the spending review did not include money to tackle invasive species, a leading cause of biodiversity loss.
Cutting aid budget bad for climate, says Greenpeace
Greenpeace has warned the cut in foreign aid will be bad for tackling the climate crisis.
The charity’s UK head of politics, Rebecca Newsom, said: "It will hinder poorer countries' ability to tackle and adapt to the climate emergency, and sour the UK's diplomatic relationships in the run-up to the crucial Glasgow climate conference next year."
Foreign secretary Dominic Raab is expected to make a Commons statement on Thursday setting out how the reduced aid budget will be used.
Whitehall sources insisted that by exercising rigorous control over the budget, now within the Foreign Office after DfID was scrapped, the Government will be able to deliver more with less.
Sunak accused of ‘divide and rule’ with public-sector pay freeze
Unions have claimed the chancellor’s “attempt to divide and rule will put him on a direct collision course with public service workers”. Jon Stone and Adam Forrest report:
Rishi Sunak accused of playing ‘divide and rule’ with public sector pay freeze
Chancellor sparks backlash as he tries to justify freeze on basis private sector is also suffering
Where was the Brexit excitement?
Our sketch-writer Tom Peck is confused about why the chancellor failed to mention the sunlit uplands of Brexit:
Sunak talked about hard times ahead, yet no word of the sunlit uplands we were promised | Tom Peck
You would think, given the great unforeseen hardships thanks to Covid-19, that now would be the time to big up the great opportunities that are about to begin. Not a dicky bird, though
Sunak ‘leaves Labour little space for attack’
The chancellor’s spending promises put the opposition in a difficult situation, argues John Rentoul:
John Rentoul: Rishi Sunak has left little space for the Labour Party to oppose his spending plans
By exempting lower-paid workers from the public sector pay freeze, the chancellor has taken some of the sting out of Labour’s opposition, writes John Rentoul
Home Office plans deportation flight on day lockdown lifts
The Home Office has angered campaigners by scheduling a deportation flight to Jamaica on the day England’s month-long coronavirus lockdown lifts, sparking accusations of institutionalised racism. Chantal Da Silva reports:
Home Office sparks outrage with plans for Jamaica deportation flight on day lockdown lifts
Government has said it ‘makes no apologies’ for its deportation flights
Economy ‘to have worst year since 1709’
The Office for Budget Responsibility estimates that the UK economy will contract by 11 per cent this year - the worst year since 1709.
And unemployment will from around 4.1 per cent today to 7.5 per cent. Ben Chu analyses the details of the OBR forecasts:
What did we learn from the latest economic forecasts in the spending review?
Just how bleak is the picture the Office for Budget Responsibility paints? And what are its implications for the public finances and for our living standards? Ben Chu digs into the details
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