Tag Archives: development bond

This week the British government announced that it planned to cut its overseas aid budget by 0.2 percent or about $4 billion a year. In 2019 it was $19.3 billion and Britain laid proud claim to being the world’s third largest aid donor and one of only five countries which had reached the internationally agreed aid donor figure of 0.7 percentage of GDP.

The announcement this week by Chancellor of the Exchequer Rishi Sunak was an emotional short-sighted political decision by a populist government as a knee-jerk response to the economic difficulties created by the coronavirus pandemic. It had no grounding in either humanitarian or economic considerations.

Instead it caved in to the popular conception that charity begins at home without any acceptance of the fact that we live in an increasingly interdependent and interconnected world.

Schools in the developing world will close or not open. Children will go hungry. Unemployment will rise along with political instability.  People, lots of them, will die if the proposed cut in British aid goes ahead.

British prestige in the world will also suffer. So will British trade and the British economy. The aid budget has never been an exercise in unadulterated altruism.  The fact is that aid flows from the developed to the developing world encourage global economic growth which creates markets for British goods and services. Poor people buy fewer British products. Dead people buy even less.

The aid cut still has to be voted on by parliament, and there is a growing cross-party consensus – including a number of rebel conservative MPs – that the proposal is a mistake and should be rejected. But parliamentary arithmetic – an 80-seat majority for the Johnson government – coupled with the political attraction of a simplistic solution to a complex problem, means that it will probably be approved.