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Rishi Sunak warns UK faces ‘severe recession’

Image credit: ParliamentLive.TV

Rishi Sunak warns UK faces ‘severe recession’

The Chancellor has warned the economy may not experience an “immediate bounce back” after lockdown is removed as the UK faces a “severe recession the likes of which we haven't seen”.

Rishi Sunak sought to move away from suggestions the country would experience a so-called “V-shape” recovery from coronavirus and said there will be a "degree of long-term scarring”.

He told the House of Lords Treasury Committee: “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.

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

The comments came after new figures showed the number of people claiming unemployment benefits in the UK soared by 69 per cent last month.

The Cabinet minister also said: “The longer the recession, the likelihood the degree of scarring is higher.”

On how the country might recover once the pandemic is over, Sunak explained: “We all would hope that it 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.

“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.

“Even if we can re-open retail, which I would very much like to be able to do on 1 June, 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 also admitted the Treasury was "slower to get going than I would have liked" with its coronavirus response package, after criticism the support for the self-employed took too long to be set up.

The Chancellor said: "Unlike some countries across Europe, who had done this before so they systems set up, we didn’t so we had to design as we went."

But he said the support now "ranks very favourably”, as new data shows eight million workers are currently furloughed as part of the Job Retention Scheme.

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