Britain cuts foreign aid to help pay the cost of COVID-19
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One of the pandemic’s few political heroes in the U.K. has been the dashing young finance chief, Rishi Sunak. His popularity soared as he doled out billions to combat the coronavirus disease, compensate beleaguered companies and pay furloughed workers.
But then came his sobering assessment of the economic havoc caused by COVID-19 and the damage inflicted on the government’s finances.
“We have suffered the largest fall in output in over 300 years,” Sunak told the House of Commons. “We expect the economy to have contracted by 11% by the end of this year. The government has been forced to borrow at the highest ever level in peacetime.”
Britain’s national debt, he added, was rapidly approaching 100% of GDP, and the country had no choice but to look for cuts in public spending. An obvious candidate for economizing, he said, was foreign aid.
“Sticking rigidly to spending 0.7% of our national income on overseas aid is difficult to justify to the British people,” Sunak said.
That’s when his halo slipped. Reducing aid from 0.7% of national income down to 0.5% — a cut of around $6 billion — provoked outrage. The Labour Party opposition spokesperson on aid, Anna McMorrin, was incandescent.
“This is a really shameful day,” she fumed. “A shameful day for Britain and the world, a shameful day for the Conservative government. Even the archbishop of Canterbury has said how shameful this is.”
Archbishop Justin Welby, the clerical head of the Church of England, had said that the decision by an earlier Conservative government to adopt the United Nations’ target of spending 0.7% of national income on aid had been one of the U.K.’s great moral achievements in the last 20 years. Undoing that decision, reducing that percentage, was a betrayal, he said.
A former Conservative foreign aid minister, Andrew Mitchell, went much further in denouncing Sunak’s move. Speaking in the House of Commons, Mitchell asserted that the cut would cause 100,00 deaths in the developing world. Romilly Greenhill of the advocacy group One Campaign predicted even wider, more adverse repercussions.
“Cutting aid will make it harder to get vaccines to people all over the world, harder to get the treatments that people need, and ultimately it will extend the lifetime of the pandemic,” Greenhill said.
But not everyone in the U.K. was swept along by this tide of condemnation.
“I would say cutting foreign aid at the moment is completely justified,” said Jeremy Hutton of the TaxPayers’ Alliance, which campaigns for lower taxes.
“To keep shoveling money out of the door, at the same time as borrowing huge amounts just to keep the country running, is quite indefensible,” he said.
Especially, he said, when you consider how some of that aid money has been spent in recent years.
He cites the $130 million in aid paid to India, a country that is rich enough to have its own space program and its own aid program, too.
Even more egregious, Hutton said, is the $100 million in British aid to China to pay for, among other things, a rice-growing project.
“I don’t think many people regard China as a particularly needy country. Or that the Chinese need British help in growing rice,” he said.
Over the years, a number of examples have emerged of British taxpayers funding controversial or even apparently frivolous projects, from a TV soap opera in Kenya to an Ethiopian girl band. Hutton said there are so many of these unnecessary and wasteful cases that the British government could make its cuts without causing any harm.
Not so, said Sam Nadel of the aid charity Oxfam.
“No, I would refute that aid is being wasted to any significant level,” Nadel said. “The vast majority of aid is certainly well-spent. It supports girls in education. It vaccinates children. And it was also central to the effort to combat Ebola in West Africa.”
Nadel said the cut will not only hurt some of the poorest people on the planet. As the U.K. prepares to host G-7 and climate change summits next year, he said, the nation will be diminished in the eyes of the world.
“If it’s seen to be breaking its promises now, it will make it less likely that it will be able to build trust needed to secure some of the vital agreements on, for example, climate change,” Nadel said.
But aid skeptics say that Britain has nothing to be ashamed of and nothing to fear from being compared with other countries. Even after the cut, it will still be spending more on aid than its closest European economic counterpart — France — and, on a proportional basis, three times what the U.S. is spending.
COVID-19 Economy FAQs
What are the details of President Joe Biden’s coronavirus relief plan?
The $1.9 trillion plan would aim to speed up the vaccine rollout and provide financial help to individuals, states and local governments and businesses. Called the “American Rescue Plan,” the legislative proposal would meet Biden’s goal of administering 100 million vaccines by the 100th day of his administration, while advancing his objective of reopening most schools by the spring. It would also include $1,400 checks for most Americans. Get the rest of the specifics here.
What kind of help can small businesses get right now?
A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.
What does the hiring situation in the U.S. look like as we enter the new year?
New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.
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