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  • Yes, Emily, This was a spending review, doused in doubt, wrapped in uncertainty.

  • So everything you're about to hear as a massive fat Asterix next to it because we just can't be sure what's going to happen even in the short term.

  • But we do know one thing.

  • We as a country are going to be borrowing a lot off money.

  • Firstly, because the economy has shrunk by 11% this year, that's the biggest for three centuries.

  • Take that in three centuries, since Queen Anne was on the throne.

  • This is slightly different measure here, looking at the fall in GDP from the end of last year across countries, it puts us among the worst economic performance is you can see worse than France.

  • Worse in Italy, worsen kind of Germany, the United States, Japan.

  • The attributes this partly to our speed in locking down on the length of time we were locked down.

  • For now, all of that has a cost which you can see in this graph.

  • Here, this looks a bit more complicated, but effectively just shows where the O.

  • B.

  • R.

  • Thinks our economy will go in the years to come.

  • Anything below this line it's 100 here.

  • The economy is gonna be smaller than when covert hit anything above that line.

  • It's bigger.

  • This is their projection here, this yellow line.

  • They think that our economy won't get back to where it was pre co vid before 2023.

  • Worst case scenario.

  • That's this dash blue line here.

  • It could be a way until 2026.

  • On on top Off.

  • Allow that we are spending astronomic amounts on Kobe.

  • This graph shows all the extra spending there's been totted up on covert this year.

  • Each bar is based of the graph is basically each time the chancellor or a minister or prime minister has made a big covert spending announcement, and it has grown, as you can see, and it has grown and it has grown.

  • Government has spent 22 billion on track and trace alone.

  • That's in there somewhere.

  • Or, to put it another way, over half of the whole defense budget.

  • The total for covert spending now stands at £291 billion or about 4300 for every single one of us.

  • That's the reason why the deficit is gonna be about 400 billion this year.

  • So on the face of it, you might well say that surely austerity lies ahead.

  • And that was certainly the impression the chancellor was giving.

  • And we'll get onto the short term specific specifics off that in a moment.

  • But actually, if the chancellor wanted to borrow even Mawr, then he probably could take a look at this graph here.

  • This is the 10 year gilt yield UK government debt.

  • Basically, it's the cost for the UK to government to borrow money on the international money markets.

  • And as you can see on finance, it's deficit and it has never been lower.

  • It's now at the 100.2%.

  • So once you take inflation into account, the government can basically borrow for less than nothing.

  • In fact, despite borrowing so much mawr, a combination of falling interest rates and the Bank of England quantitative easing program printing money effectively means that the cost for the government of servicing the debt, the OPR said today, is actually going to be lower than they thought it would be in March.

  • Despite all the extra borrowing now, interest rates could rise in the future, but in the short term.

  • There is absolutely no problem whatsoever in terms of the government financing its debts.

  • But despite this, as I say, there were hints off belt tightening to come in this spending spending review Core departmental spending, minus Kobe is actually gonna be £10 billion less generous than the chancellor announced in March, so potential cuts to come.

  • There was no mention either of welfare, either.

  • Today in the spending review, Universal Credit was topped up by £20 a week when the pandemic hit.

  • The chancellor didn't say if that would be extended, and if not, that's gonna mean millions of families losing about £1000 a year at a time when the OPR says unemployment could hit two six million by mid 2021 finally public sector pay, the chancellor announced a partial spending a partial public pay freeze, excluding some NHS workers on low paid staff.

  • So the point is that although the government is spending a lot of money, much of it is going to be eaten up by co vid, so it isn't necessarily going to feel like it in the wider economy.

  • On any give from the chancellor will mean that we will be further in the red unless the economy recovers more quickly than we assume It felt today, as if the contours of the parliament were finally honing interview.

  • And it will be dominated once more by questions of finance, debt and deficits and debate about actually how important, given the global macroeconomic context, any of those questions really are.

  • Thanks, Lewis.

  • So those are the numbers, the chances grappling with today.

  • He told us the choices he'd started to make with them.

  • Public sector workers outside of the NHS will see their pay frozen.

  • Ah, cut in real terms.

  • Pay on that cut in the foreign aid budget has caused stark divisions within the Conservative Party.

  • Already has today seem one minister resigned.

  • Nick.

  • What has the latest on the political ramifications of today's announcement?

  • Tunic.

  • Perhaps we should start with that 1922 committee of backbench Conservative MPs, all kicking off their Yes, I'm told.

  • There was some tense moments of that meeting that was addressed virtually by Boris Johnson and Richie Soon, AC and conservative MPs who have concerns about co vid restrictions picked on that forecast by the Chancellor.

  • Oven 11.3% contraction in the economy this year, and the reason why they did that was this report here by the Office for Budget Responsibility.

  • That is their central assessment of what could happen this year on that makes assumptions on what happens with co vid, so it assumes that there is hi to medium restrictions.

  • It then assumes that vaccines will not be widely available until mid 2021 on DSO Mark Harper, the former conservative government chief whip who is now head of this Corona virus recovery group.

  • He then said, This suggests that these restrictions are gonna go far, far longer than you are suggesting.

  • Prime Minister Boris Johnson told the meeting that you shouldn't sort of read too much into that.

  • But the government will tomorrow outline which parts of England will go into these new three tiers on, Boris Johnson said to that meeting, folks, I'm afraid the tearing tomorrow will be tough on.

  • Some conservative MPs were guided that nowhere in England will go into the more benign Tier one interesting s 02 and three and those announcements on the geography will come tomorrow.

  • Today, response to the spending review.

  • What's that been like, well, riel anger from the one nation conservative wing of the party at that cut in the international A budget.

  • But for the chancellor's overall approach, which is, we need to continue providing state support.

  • But we do need to signal that eventually we will have to deal with the debt.

  • There was overall support for that.

  • I spoke to one grandee who said to me they thought it was a rather skillful statement by the chancellor.

  • But I spoke to one ally of Boris Johnson who's on the right of the party, and this person said to me, We won a general election by criticizing Jeremy Corbyn for his magic money tree.

  • It turns out that we found a magic money forest.

  • So I've been looking at the political calculations behind today's spending review.

  • E believe everybody.

  • How do you How do you How do you do?

  • Fantastic newfound friends.

  • We want to unite and level up the country.

  • A commitment made a reward in the ballot box on a year later, Rishi Soon AC delivers for those Redwall voters with a £4 billion leveling up fund chancellor almost exactly the amount saved by cutting the aid budget from 0.7% of national income to 0.5%.

  • A big step, which broke a manifesto pledge during a domestic fiscal emergency when we need to prioritize our limited resources on jobs and public services.

  • Sticking rigidly to spending 0.7% of our national income on overseas aid is difficult to justify to the British people, especially when we're seeing the highest peacetime levels of borrowing on record.

  • A gently worded but unmistakable jettisoning of a landmark Tory pledge by the ever polished chancellor who showed he has a tough political edge.

  • The next general election is never far from.

  • Richie Soon acts mind as he held firm with the Conservatives, new Redwall voters with that cut in the aid budget that is unlikely to be mourned in the party's new seats but was deplored by more traditional one nation conservatives.

  • Well, it's a year since our manifesto was launched, and I think today we heard in the spending review the scale of the economic challenge and the chancellor is having to deal with very difficult circumstances, and I think in that circumstance he managed to stick to our manifesto very, very well but there was one pledged that he broke and that was our pledge to the world's poorest.

  • And obviously I feel personally ashamed.

  • Having seen the good that aid does in the world, that that should be the first manifesto pledge the government chooses to break.

  • A veteran Tory understands the decision.

  • I recognize that we do a lot of good with our aid budget and I share some of the concerns of my colleagues.

  • But the reality is we're asking the general public here and my constituents and those up and down the country to make great sacrifices.

  • And I think that when we're asking them for those sacrifices, I think they will expect.

  • And I know they will expect from talking to them and from my inbox that you know the cuts, our across the board Labor believes the chancellor has made a big mistake.

  • This is a really shameful day, a shameful day for Britain in the world, but a shameful day for the Tories.

  • They've got their own back benchers speaking out about it.

  • Even the Archbishop of Canterbury has said how shameful this is, but look what they have done at a time off this pandemic.

  • But this pandemic has shown how interconnected we are as a world.

  • The vulnerabilities that we all face the interconnected nature of that to cut the aid budget at that time is deeply damaging and deeply shameful.

  • E screw this up a rare moment of doubt from a supremely confident politician but no personal doubts about the political decisions made today perfect.

Yes, Emily, This was a spending review, doused in doubt, wrapped in uncertainty.

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UK to face worst recession in 300 years as Covid crisis continues - BBC Newsnight

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    林宜悉 posted on 2020/11/29
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