08:46 GMT17 January 2021
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    Nations Restart Economies as Search for COVID-19 Vaccine Continues (143)

    In its first quarterly monetary policy report since the beginning of the COVID-19 pandemic, on 6 May, the Bank of England warned the British economy could shrink 14 percent in 2020, with unemployment likely to more than double by spring, as the spreading coronavirus results in the deepest recession in modern history.

    Three former UK chancellors have issued a warning to the British government to gear up for 1980s unemployment levels amid the looming recession triggered by the coronavirus pandemic, reports The Guardian.

    With job losses surging due to COVID-19 lockdowns, Lord Alistair Darling, George Osborne and Philip Hammond have urged government efforts to offset the fallout for the population from the health crisis.

    The UK Labour Party’s last chancellor Alistair Darling, who spearheaded the government’s response to the 2008 financial crisis, was cited as telling the Commons Treasury committee online:

    “We need to get ourselves into the frame of mind where we’re thinking about 1980s levels of unemployment.”
    Alistair Darling during Moscow meeting
    © RIA Novosti . Alexey Panov
    Alistair Darling during Moscow meeting

    According to Darling, the government urgently needed to be drawing up measures to aid those who have been left jobless, or help them retrain for new opportunities.

    “Government needs to be planning. Let’s just assume things are going to be worse – it’s better that it’s good and well – but don’t leave it too late because it does take a long time to put these things in place,” he said.

    Darling’s Conservative successor at the Bank of England, George Osborne, warned of a massive level of unemployment likely to be brought about by the current economic consequences of the spreading coronavirus epidemic.

    Britain's then Chancellor of the Exchequer George Osborne leaves 11 Downing Street, in London for prime minister's questions, Wednesday, July 13, 2016.
    © AP Photo / Kirsty Wigglesworth
    Britain's then Chancellor of the Exchequer George Osborne leaves 11 Downing Street, in London for prime minister's questions, Wednesday, July 13, 2016.
    “There will be loads of people in businesses that have gone bust that aren’t going to return, and people who are coming off furloughs into unemployment. That is going to be a big social challenge, and of course economic challenge, for this government,” said Osborne.

    UK Joblessness to ‘More than Double’

    Earlier, the Bank of England warned that the unemployment figures could potentially more than double from the current rate of 3.9 percent by the end of 2020, as a result of the COVID-19 pandemic and lockdown measures put in place to try and stop its spread.

    Back in 1984, Britain’s unemployment rate peaked at almost 12 percent during the period of de-industrialisation under the government led by then-Prime Minister Margaret Thatcher.

    Warnings from the former chancellors come amid reports that as lockdown restrictions are being gradually eased in the country in an effort to reopen the economy, the current UK chancellor, Rishi Sunak, is believed to be considering a scaling back of the government’s furlough wage subsidy scheme as of August.

    Sunak is suggested as developing a fresh package of measures, including those aimed at generating more job opportunities, to be unveiled in July, writes the publication.

    In light of the reports, Darling and Hammond warned the chancellor of the dangers that a fresh round of austerity to tackle rising government borrowing could be fraught with.

    According to the ex-chancellors, pro-growth policies were the only means of boosting a stronger economic recovery.

    “In the recovery phase, the next two years, where the debt as percentage of GDP is not the primary concern we should be addressing,” suggested Philip Hammond, who served as chancellor under Prime Minister Theresa May.

    The British government was not yet in a position to reopen the economy fully in light of the continuing health risks from the COVID-19 pandemic, believes Alistair Darling.

    The UK government would need to either impose cuts or raise taxes after the coronavirus pandemic had subsided, said George Osborne, adding:

    “Sadly we are poorer than we thought we were, and either we’re going to have to raise more in revenue or spend less than we were planning.”

    Avoid ‘Going Off a Cliff’

    On the issue of a post-Brexit trade deal with Brussels, all three former chancellors warned UK Prime Minister Boris Johnson of the risks of failing to hammer out an agreement before the end of the transition at the end of the year.

    According to Philip Hammond, a “quick and dirty” deal would be instrumental in avoiding the country’s crashing out of the EU.

    British Foreign Secretary Philip Hammond arrives in 10 Downing Street in central London on May 13, 2016
    British Foreign Secretary Philip Hammond arrives in 10 Downing Street in central London on May 13, 2016

    George Osborne echoed this stance, acknowledging the two sides would most likely sign off on a limited deal to avoid “going off a cliff”.

    “No-deal would be absolutely disastrous. With everything we’re going through with Covid you’d have to be mad to want to end up with a situation where you erect huge trade barriers and tariffs just at the time you hope your economy might be beginning to recover,” added Alistair Darling.
    Nations Restart Economies as Search for COVID-19 Vaccine Continues (143)


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    Margaret Thatcher, recession, Recession, Philip Hammond, George Osborne, Alistair Darling, COVID-19, Great Britain, Britain
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