The UK has entered a state of “Economic emergency & rdquor; and this year will suffer an unprecedented drop, from 11,3% of gross domestic product (GDP), due to the pandemic, according to the Minister of Finance Rishi Sunak. The public deficit will rise to almost 4 billion pounds for the year ongoing budget, which is equivalent to a 19% of PIB, an abysmal sum due to unprecedented efforts, according to Sunak, to sustain employment hit hard by the coronavirus. This is the largest contraction in more than 300 years according to the minister who has presented in the House of Commons the budget priorities of the Conservative government for the 2021-22 financial year.
Health and economic emergency
According to calculations by the Office of Budgetary Responsibility (OBR), the British economy will grow by 5.5% in 2021, 6.6% in 2022 and 2.3% in 2023. Unemployment will be situated by 7.5% in the second half of 2021. “Our health emergency is not over. Our economic emergency has only just begun & rdquor ;, Sunak said. “Our immediate priority is to protect people’s lives and their livelihoods & rdquor ;. The Government has confirmed that it will reduce foreign aid in 2021, from the current 0.7% to 0.5%. An “embarrassing” cut, according to the Archbishop of Canterbury, Justin Welby.
The spending review for the 2021-22 fiscal year, with a more serious collapse in GDP than in the 1921 recession, faces the double uncertainty of the efficacy of the COVID vaccine and the consequences of ‘Brexit’. Negotiations remain blocked and it is not yet known whether the UK will leave the European Union on December 31 with or without a trade agreement.