Chancellor of the Exchequer Rishi Sunak today warned that “hard times are here” after the UK’s GDP contracted by 20.4 per cent in the last three months, plunging it into the worst recession on record.
Speaking to Sky News, Sunak warned that “many more people” would lose their jobs as a result of the recession, which was brought on by the coronavirus pandemic.
“I’ve said before that hard times were ahead, and today’s figures confirm that hard times are here”, he said.
“Hundreds of thousands of people have already lost their jobs, and sadly in the coming months many more will.
However, the Chancellor pointed out that June’s 8.7 per cent GDP recovery showed that despite the gloom there were still some “promising signs”.
“What we do know is that there are promising signs,” he said. “There’s still work to do and even as we recover many people are going to lose their jobs, already have lost their jobs, and we need to make sure that we are constantly focused on providing new opportunities for those people.”
At the moment, the government is paying 80 per cent of the wages of over 9m workers under its job retention “furlough” scheme, which has won Sunak plaudits.
However, with the scheme set to wrap up at the end of October, he reasserted that he was still opposed to extending the programme any further.
Economists have warned that the end of the scheme will see a huge wave of redundancies as firms are forced to cut staff in the lead up to Christmas.
Currently, the UK’s unemployment rate stands at 3.9 per cent, but analysts have warned that the scheme is masking the full extent of the meltdown in the country’s labour market.
The Bank of England said that the unemployment rate could increase to as much as 7.5 per cent by the end of the year.
Sunak said that his focus was now on providing new opportunities for those under threat of losing their jobs.
“Whether it is through the job retention bonus, whether it is through initiatives like eat out to help out or the kickstart scheme for young people, I want to provide people with new opportunities”, he added.