Sunak vows jobs will be 'number one priority' in Spending Review

Sunak vows jobs will be 'number one priority' in Spending Review

UK Chancellor of the Exchequer Rishi Sunak says the nation's economy is forecast to contract 11.3% this year, the worst performance in more than three centuries.

Unemployment is forecast to hit 2.6 million by the middle of 2021, official forecasts from the Office for Budget Responsibility (OBR) said.

However, he said pay rises in the rest of the public sector will be "paused" next year.

The union for firefighters said it had been lobbying for more investment "but rather than fund the frontline responders to these emergencies, the Chancellor has chose to try and give them a real-terms pay cut".

"Coronavirus has deepened the disparity between public and private sector wages", Sunak said.

It also said that government borrowing in this year was 19% of the size of the economy, a peacetime record at just under £400bn.

The OBR said the economy would not return to pre-crisis levels until the end of 2022, dampening hopes of a swift "V-shaped" recovery, with long-term economic growth downgraded for at least the next five years.

With public debt soaring owing to Wednesday's spending commitments and the huge sums paid out to support the United Kingdom economy during the pandemic, Sunak said "sticking rigidly" to the UK's overseas aid budget was "difficult to justify to the British people". "But this situation is clearly unsustainable over the medium term".

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.

He also faces criticism - including from some senior Conservatives - over widely signalled plans to cut foreign aid, suspending the UK's commitment to spend 0.7% of national income on overseas development.

"In such a hard context. especially for those people working in sectors like retail, hospitality and leisure, I can not justify a significant across-the-board pay increase for all public sector workers", added the finance minister.

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Dave Prentis, general secretary of the nursing and municipal union UNISON, said more pay for his 1.3 million members would be spent on the local economy, and denounced Sunak's spending plans and £250 rise for the lowest paid as "austerity plain and simple".

Mr Sunak said the Government will also increase the National Living Wage by 2.2% to £8.91 an hour.

Almost £3bn would be provided to Work and Pensions Secretary Therese Coffey to deliver a new three-year "restart programme" to help more than one million people who have been unemployed for more than 12 months to find new work.

Despite the dire national finances, total departmental spending will be £540 billion in 2021-22, a £14.8 billion rise in cash terms.

Tax rises and spending cuts look inevitable - and daunting: to plug that £30bn gap through income tax alone would require a 6p hike in the rate.

Britain's government is on track to borrow roughly 400 billion pounds ($534 billion) this financial year as it struggles with the social and economic impact of COVID-19, which has killed more than 55,000 people.

Mr Sunak confirmed that public sector workers, excluding some NHS staff and those earning less than £24,000, will have their salaries frozen next year. No new trade agreement has yet been reached with the European Union.

But the public sector pay squeeze for more than a million above average earners outside the NHS will hurt.

The UK will be "poorer in the eyes of the world" due to the aid cuts, Tory former foreign secretary Jeremy Hunt added.

The much bigger, tougher decisions that will be needed arise from the assumed persistence of the economic hit, and therefore of levels of government borrowing above £100bn a year for the next few years.

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