In a statement to lawmakers, Treasury Chief Rishi Sunak said the target of allocating 0.7 percent of national income to foreign aid will be lowered to 0.5 percent. The move is expected to free up around £ 4bn ($ 7.2bn) for the Conservative government to use elsewhere.
He said that “sticking rigidly” to the goal “is difficult to justify” to the people at a time when the economy has been so hit hard by the coronavirus pandemic.
“At a time of unprecedented crisis, the government must make difficult decisions,” he said.
He insisted that the government aims to return to the target introduced by Tony Blair’s Labor government some two decades ago, but that even with the new target, the UK will remain the second largest aid spender among the world’s leading industrial nations. Group of Seven.
The decision goes against the government’s promise in last year’s general election to uphold the aid target. It received strong criticism from across the political spectrum, including within Johnson’s own Conservative Party, as well as among anti-poverty activists.
Save the Children said it was “deeply disappointed” by the cut and warned it could mean “100,000 lives not saved by immunization and a million less children supported through education.”
The organization’s chief executive, Kevin Watkins, said the government had “broken a promise” to the world’s neediest people and “broken Britain’s reputation for leadership on the world stage” ahead of the World Conference. the United Nations on Climate Change 2021 next year.
The Archbishop of Canterbury, Justin Welby, said the cut “is shameful and wrong” and urged lawmakers to “reject it for the sake of the poorest and the UK’s own reputation and interest”.
In a sobering assessment that provided the backdrop for the decision to cut aid, Sunak sought to balance continued support for the economy with a longer-term commitment to clean up public finances after a marked deterioration.
“Our health emergency is not over yet and our economic emergency has only just begun,” he said.
Sunak said independent government economic forecasters predict the British economy will end up 11.3 percent smaller this year than where it started, the “biggest drop in output in more than 300 years.”
The Office of Budget Responsibility also said the economy will start to grow again next year as restrictions on coronavirus are eased and expected vaccines go live. The agency expects growth of 5.5% in 2021 and 6.6% the following year and that, as a result, the production lost during the pandemic will not have recovered until the last quarter of 2022.
Sunak warned that the cost of the pandemic will create “scars” in the long term, with an economy 3% smaller in 2025 than planned in the March budget.
This year’s massive drop in output has caused a huge increase in government borrowing as the government sought to cushion the blow. Sunak said that the government has injected £ 280 billion ($ 509 billion) into the economy to overcome the pandemic and that as a result, loans this fiscal year will rise to £ 394 billion ($ 526 billion), or the 19 percent of national income. , “the highest level of indebtedness in our history in times of peace.”
He warned that with indebtedness at this level, underlying public debt is increasing towards 100 percent of annual GDP.
“As high as these costs are, the costs of inaction would have been much higher,” he said. “But this situation is clearly unsustainable in the medium term.”
Sunak said government doctors and nurses in the National Health Service will get a pay increase next year, but others in the public sector will not.
Sunak also announced extra money to support Prime Minister Boris Johnson’s investment program in infrastructure across the UK, particularly in the north of England, where the Conservatives won seats during the last general election.