No-deal would hammer economy, warns OBR as minister quits over foreign aid cut

Rory Sullivan and Jane Dalton
·1-min read
<p>A</p> (Reuters TV)

A

(Reuters TV)

Rishi Sunak has announced that the "economic emergency" caused by the pandemic has only just started, while a no-deal Brexit would make the blow even worse, according to the Office for Budget Responsibility (OBR).

The official forecaster warned that unemployment levels could reach 8 per cent, rather than the 7.5 per cent it currently predicts, if the UK does not reach a free trade deal with the EU.

The OBR also said that 2 per cent could be knocked off GDP growth without an agreement.

Among the major announcements in Wednesday’s spending review, Mr Sunak said that some public-sector workers would have their salaries frozen next year and that the overseas aid budget would be cut to 0.5 per cent of national income, a decision that was met with protest from the opposition benches.

The cut to the foreign aid budget led to the resignation of Baroness Suggs, a Foreign Office minister.

“I believe it is fundamentally wrong to abandon our commitment to spend 0.7% of gross national income on development. This promise should be kept in the tough times as well as the good,” she wrote in her resignation letter to the prime minister.

See what was our live coverage below.