Sunak announces record peacetime borrowing to combat historic downturn

UK's economic emergency' leads to cut in foreign aid and partial public sector pay freeze

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Rishi Sunak has said the government will borrow a peacetime record of almost 400bn this year as it seeks to combat the worst recession in more than 300 years.

The chancellor said the UK faced an economic emergency" warranting a cut in international aid and a public sector pay freeze for millions, with an exemption for NHS staff and workers earning less than 24,000 per year. However, he insisted there would be no turning back from the government's levelling-up agenda, announcing a 4bn new fund to pay for local projects such as bypasses, libraries and station improvements.

Related: UK politics live: Rishi Sunak freezes public sector pay except for NHS and cuts overseas aid