Rishi Sunak warns UK headed for ”severe recession”

Rishi Sunak (Photo: Matt Dunham/Pool via REUTERS).
Rishi Sunak (Photo: Matt Dunham/Pool via REUTERS).

UK Chancellor Rishi Sunak on Tuesday (19) warned that Britain’s economy was headed for a “severe recession” and that any recovery from the coronavirus lockdown impact is unlikely to be swift.

Sunak, who is leading the UK government’s economic response to the pandemic and related business slowdown, told the House of Lords Economic Committee that despite his best efforts, more jobs will be lost.

“This lockdown is having a very significant impact on our economy. We are likely to face a severe recession, the likes of which we haven’t seen, and of course that will have an impact on employment,” said Sunak.

“Although we have put unprecedented mitigating actions in place, I certainly won’t be able to protect every job and every business. We’re already seeing that in the data, and no doubt there will be more hardship to come,” he said.

In reference to questions about a “bounce back” of the economy, the senior Cabinet minister said that a major turnaround would take time as the lockdown measures to control the spread of the deadly virus are yet to be fully eased.

“We all would hope that it (recovery) is as swift and strong as it can be. We are getting data from around Europe and around the world as countries are progressively easing and lifting restrictions,” he said.

It is not obvious that there will be an immediate bounce back. It takes time to get back to the habits that they had. There are still restrictions in place, he said.

“Even if we can re-open retail, which I would very much like to be able to do on June 1, there will still be restrictions on how people can shop, which will have an impact likely on how much they spend. And those things will all take time. So I think, in all cases, it will take a little bit of time for things to get back to normal, even once we’ve re-opened currently closed sectors,” he said.

The stark warning came as the Office for National Statistics (ONS) released latest statistics to show that the UK”s unemployment total had jumped by 856,500 during the coronavirus lockdown.

The number of people claiming unemployment benefits soared to 2.1 million in April, the first full month of the strict social distancing measures that shut down most businesses.

Separate ONS figures showed UK unemployment rose by 50,000 to 1.35 million in the three months to March, with an unemployment rate estimated at 3.9 per cent, slightly down on the previous quarter.