Coronavirus crisis: Chancellor ‘deeply troubled’ over warnings of economy shrinking by 35%
Calling on a huge national effort in the war against the deadly disease the Chancellor promised any hit to the economy would be “temporary” and that the recovery is one that “we are all in together”. But he warned of “more tough times to come” amid warnings the economy faces shrinking by 35 percent if the lockdown continues for three months, with two million people made jobless.
Mr Sunak’s remarks came after staggering analysis from the Office for Budget Responsibility predicted the UK’s economy will fall dramatically if we remain in a prolonged lockdown. He said: “When I see these numbers, I am deeply troubled.
“This is going to be hard. Our economy is going to take a significant hit and as I’ve said before that’s not an abstract thing. People are going to feel that in their jobs and in their household incomes.”
Mr Sunak said people should brace for “hardship” but insisted the hit from the lockdown measures designed to combat the virus would only be short term.
And he flatly dismissed the idea that ministers must choose between propping up the economy and stopping people dying from the outbreak, saying the Government would always protect lives first.
The Office for Budget Responsibility, an independent financial watchdog, said curbs staying in place for three months, followed by a similar period of partial restrictions, will slash GDP by more than a third.
Unemployment will soar to 3.4 million and the Government’s deficit will skyrocket to £273billion, it was claimed.
The OBR also warned that GDP would plummet by 13 percent this year, worse than anything in the past century.
Its gloomy analysis came as the UK’s death toll from Covid-19 reached 12,107 yesterday, following a leap of 778 from the previous day’s total.
Britain’s three-week lockdown lasts until tomorrow, but ministers are widely expected to extend it until May 7, a total of six weeks.
Any exit is likely to involve a partial easing of the measures, as seen this week in Spain and Italy.
Concerns have also been raised that it is impossible to lift the curbs at the moment as the public is strongly in favour of them staying in place, and would simply refuse to go back to normal.
A Government source said last night: “Our strategy is focused on saving lives. We have been clear that all decisions will be guided by the scientific advice and data.
“Talk of an exit strategy before we have reached the peak risks confusing the critical message that people need to stay at home in order to protect our NHS and save lives.”
But the OBR’s economic figures will have sent shock waves through the Government.
Responding to the data during the daily Downing Street coronavirus briefing, the Chancellor said: “These are tough times and there will be more to come. As I have said before, we cannot protect every business and every household.
“Right now, the single most important thing we can do for the health of our economy is to protect the health of our people.
“It is not a case of choosing between the economy and public health.
“Common sense tells us that doing so would be self-defeating. At a time when we are seeing hundreds of people dying every day from this terrible disease, the absolute priority must be to focus all of our resources in a collective national effort to beat this virus.”
Mr Sunak said the efforts of everyone in the country will help “right the ship”.
He added: “The OBR have been clear that if we had not taken the actions we have, the situation would be much worse. In other words, our plan is the right plan. The best way out of this is to grow the economy, and keeping it intact at this stage will allow it to bounce back.
“If that happens it means the long-term impact on public finances will be reduced.”
Earlier, former Tory Chancellor George Osborne described the economic numbers as “shocking”, warning that the effects of the virus will be with us “long after” any cure. The International Monetary Fund said the world economy in 2020 will suffer its worst year since the Great Depression of the 1930s.
The fund said it expects the global economy to shrink three per cent, before rebounding in 2021 with 5.8 percent growth.
It acknowledged that prospects for a rebound next year are clouded by uncertainty.
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