U.K. Aid Row Spells Trouble for Sunak Goal to Fix Finances

A Conservative Party row over cuts to U.K. foreign aid spending is a warning of bigger challenges to come for Chancellor of the Exchequer Rishi Sunak, as he tries to repair public finances battered by the pandemic, Bloomberg News reported. Privately, officials acknowledge the government has its hands full in Parliament despite holding a significant majority, because a group of MPs in Boris Johnson’s ruling party have repeatedly shown their willingness to rebel. That’s proved especially problematic on foreign aid, which is legally mandated at 0.7% of gross domestic product. Sunak wants to temporarily reduce the level to 0.5% until the country’s finances have recovered from the pandemic, but the government has not offered a vote on the measure. That’s angered the Tory rebels, who were thwarted by parliamentary procedure in their attempt to use different legislation to force Sunak into a U-turn on Monday. They pressed for an emergency debate in Parliament on Tuesday, suggesting they’re not about to back down. The backlash represents a significant challenge for Sunak, who will face far larger spending decisions as he tries to put the government onto a more sustainable footing. The cut to overseas assistance would save the Treasury about 4 billion pounds ($5.7 billion) this year, barely scratching the surface of a deficit of more than 300 billion pounds -- the most in British peacetime. An official said that the spending pressures on Sunak are huge, hence the chancellor’s preference is to announce policies at fiscal events -- such as budgets and spending reviews -- so the Treasury can work through all the trade-offs at the same time. A second official said the government will restore the lost aid spending when the fiscal situation allows, and it’s right to prioritize spending on public services in the meantime. Read more.