The economic emergency
The Chancellor introduced his long-awaited spending review this week with a warning that the UK is facing an “economic emergency”. Official forecasts see the economy shrinking by 11.3% this year – the biggest fall in 300 years – while borrowing will hit £394bn, the highest level in peacetime history. The number of people out of work is expected to reach 2.6 million (or 7.5%) next year. To help see the UK through this pandemic-induced recession, Rishi Sunak confirmed £280bn in spending, and a £4bn “levelling up” fund to pay for local projects. He also announced a public sector pay freeze and a temporary cut in overseas aid from 0.7% to 0.5%.
Last week, Boris Johnson agreed a four-year funding deal for the Ministry of Defence worth an extra £16.5bn. The main items to receive funding include a new space command, a national cyber force, and an artificial intelligence agency, with the Royal Navy also a major beneficiary.
What the editorials said
Sunak has “had a ‘good pandemic’ so far”, said The Sun. The furlough scheme has generally been a success, and disaster has been averted in the hospitality sector. But with Britain now £2trn in debt, the Chancellor must start to plug the hole in the public finances. And if taxes aren’t to rise, that has to mean imposing spending cuts, said The Times. As well as foreign aid, the axe has fallen on public sector workers who – unless they’re on the frontline of the NHS, or earn less than £24,000 – face a pay freeze. The move was met with a predictable outcry, but the Chancellor is right to point out that so far most public sector workers have been shielded from job losses in the pandemic. It’s only fair that they now share the burden of repairing the damage to the nation’s finances.
Actually, they’ve done quite enough already, said The Guardian. Cast your mind back to the spring, and you’ll recall that the nation gratefully cheered the key workers – many of whom were from the public sector – who kept the country afloat early in the pandemic. And how does the Government repay them? With a real-terms cut to their wages.