Rishi Sunak warns of ‘never seen before coronavirus recession’ leaving permanent damage

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CHANCELLOR Rishi Sunak has warned the UK is facing a “severe” recession, the likes of which the nation has never seen before.

He told MPs today the Government would not be able to save every job and there could be a long-term “scarring” of the British economy.

Rishi Sunak said the UK was facing a “severe” recession
Rishi speaking at the Economic Affairs Committee

He said: “I certainly won’t be able to protect every job and every business, we’re already seeing in the data there will be more hardship to come.

“Lockdown is having a significant impact on our economy and we are likely to face a severe recession the likes of which we haven’t seen (before).

“Of course that will have an impact on employment.”

Mr Sunak said the length and depth of that recession will depend on how much longer the nation is forced to stay in economic shutdown to keep coronavirus from ripping through the UK.

He said: “The question that occupies my mind and long term is more relevant is to what degree of long term scarring is there on the economy as the result of this recession?”

It was revealed this morning unemployment in the UK had skyrocketed by 50,000 to 1.35 million in three months.

The number of people claiming unemployment benefits has soared to 2.1 million, and the number of people relying on the Government’s furlough and self-employment schemes has hit 10 million.

Mr Sunak said: “The question is (once the lockdown is over) what do we return to? The jury is out.

“We are clearly dealing with something unprecedented, so the longer the depth of the recession it is likely the degree of that scarring will be greater.”

National economic growth slumped by a massive 5.8 per cent in just March alone – before the country had even experience a full month in lockdown.

The collapse is the largest ever monthly slump on record.

The Treasury predicted last week the pandemic will cost the exchequer £300billion this year. 

The Office of Budget Responsibility (OBR) has also warned that the nation will have to borrow £123 billion just this year to buoy up the Government’s support schemes.

Mr Sunak said the cost of both the employee furlough and self employed schemes would cost “several tens of billions of pounds” by the time those schemes are wound down.

The Chancellor announced last week that the furlough scheme – which pays employees 80 per cent of their pay up to £2,500 – would be extended to October.

He said today: “This is unprecedented action, clearly, I genuinely believe that the situation would be considerably worse long term had we not taken this action.

“We will have increased debt as a result of this year, but medium term what will matter is what is the size of our economy?”

 

 

Did you miss our previous article…
https://www.hellofaread.com/politics/school-reopening-could-be-delayed-beyond-june-1-as-northern-towns-revolt-at-plans/