yes emily this was a spending review
doused in doubt
wrapped in uncertainty so everything
you're about to hear as a massive
fat asterisk 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 of 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
a 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 performers as
you can see worse than france worse in
italy worse in canada germany
the united states japan the obr
attributes this partly to our speed in
locking down
and 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 obr thinks our economy will go
in the years to come anything below this
line this 100 here
the economy is going to be smaller than
when covered here 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-covered before
2023 worst case scenario that's this
dashed blue line
here it could be all the way until 2026
and on top of all that we are spending
astronomic amounts on kobe this graph
shows all the extra spending that's been
totted up
on covid this year each bar is base of
the graph is basically
each time the chancellor or a minister
or prime minister has made a
big coveted 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 but in another way
over half of the whole defense budget
the total for covid spending
now stands at 291 billion
pounds or about 4 300 for every single
one of us that's the reason why
the deficit is going to be at 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 on to the
short-term
specific specifics of that in a moment
but actually
if the chancellor wanted to borrow even
more
then he probably could take a look at
this graph here this is the
10-year guilt yield for 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 and financed its deficit
and it has never
been lower it's now at 0.2
so once you take inflation into account
the government can basically
borrow for less than nothing in fact
despite borrowing so much more
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 obr
said today is actually going to be lower
than they thought it would be in march
despite all that 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 of belt
tightening to come in this spending
spending review core departmental
spending
uh minus covid is actually going to be
10 billion pounds
less generous than the chancellor
announced in march so potential
cuts to come and there was no mention
either of welfare either
today uh in the spending review
universal credit was topped up by 20
pounds a week when
the pandemic hit the chancellor didn't
say if that would be extended and if not
that's going to mean millions of
families losing about 1 000 pounds a
year
at a time when the obr says unemployment
could hit 2.6
million by mid-2021 and finally
public sector paid a chance to announce
a partial spending
a partial public pay freeze excluding
some nhs workers
and 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 kovid so it isn't
necessarily going to
feel like it in the wider economy and
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 controls of the parliament
were finally honing interview and it
will be dominated
once more by questions of finance debt
and deficit 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 chancellor's
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
a cut in real terms pay and that cut in
the foreign aid budget has caused stark
divisions within the conservative party
already
has today seen one minister resign nick
watt has the latest on the political
ramifications of today's
announcement nick perhaps we should
start with that 1922 committee of
backbench conservative mps
all kicking off there yes i'm told there
were some tense moments of that meeting
that was addressed virtually by boris
johnson and rishi sunak and
conservative mps who have concerns about
covid restrictions
picked on that forecast by the
chancellor of an 11.3 percent
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
and that makes assumptions on what
happens with covid so it assumes that
there is
high to medium restrictions it then
assumes that
vaccines will not be widely available
until
mid 2021 and so mark harper the former
conservative government chief whip who's
now head of this coronavirus uh recovery
group
he then said this suggests that these
restrictions are going to 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 and boris
johnson
said to that meeting folks i'm afraid
the tiering tomorrow will be tough
and some conservative mps were guided
that
nowhere in england will go into the more
benign
tier one interesting um so two and three
and those announcements
on the geography will come tomorrow
today response to the spending review
what's that been like
well real anger from the one nation
conservative wing of the party at that
cut
in the international aid 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
grande 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
everybody how do you do it how do you do
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
and a year later rishi sunak delivers
for those red wall voters
with a four billion pound 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 percent
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 polish chancellor who showed
he
has a tough political edge the next
general election
is never far from rishi sunak's mind as
he held firm
with the conservatives new red wall
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
uh managed to stick to our manifesto
very very well but there was one
pledge 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 uh the
general public here and my constituents
and
those up and down the country to make
great sacrifices
and i think when we're asking them for
those sacrifices
i think they will expect and i i know
they will expect from uh talking to them
and from my inbox that
uh you know the the cuts are across the
board
neighbor 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 benches
speaking out about it even the
archbishop of canterbury has
said how shameful this is but look
what they have done at a time of this
pandemic
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
if i didn't screw this up a rare moment
of doubt from a supremely confident
politician
but no personal doubts about the
political decisions
made today perfect