Rishi Sunak has said there is no trade-off between public health and the economy in the wake of new estimates suggesting GDP will drop by 35 per cent this quarter.
Speaking at today’s press briefing, the chancellor said the coronavirus lockdown was necessary to protect the long-term future of the economy.
This is in contrast to recent press speculation that Sunak and other ministers are urging for a shorter coronavirus lockdown due to the impact it could have on the economy.
“The single most important thing we can do for the economy is protect the health of our people,” he said.
“It’s not a case of choosing between the economy and public health – common sense tells us that would be self defeating.
“The absolute priority must be to focus all our resources…in a collective national effort to beat this virus.”
The Office of Budget Responsibility (OBR) released modelling today that predicted GDP could plummet by 35 per cent this quarter, with unemployment more than doubling to 10 per cent.
It also predicted that the measures taken by the government to provide economic relief and stimulus would lead to the highest budget deficit since World War II.
Sunak was keen to point out at the press briefing that the OBR’s paper also predicted that the economy could potentially rebound due to measures the government has implicated.
“I hope our measures will allow us to bounce back and that is something they talk about in there,” he said.
“It will be difficult in the short term, I think the measures we’ve put in place will help and will help us to recover strongly.”
The Treasury’s measures to protect businesses and jobs revolve around a mixture of business grants, government-backed loans and direct wage subsidies.
The government’s coronavirus business interruption loan scheme (CBILS) has come under some criticism, after it was revealed last week that just 4,200 had been given bank loans through the scheme.
Sunak said that changes recently made to the scheme – to allow all businesses with annual revenues of £45m or less to access it and to ban banks from asking for collateral on loans under £250,000 – had increased the rate of new loans.
“There’s been enormous improvement,” he said.
Sunak also confirmed previous estimates that the government’s job retention scheme would be open for applicants by 20 April.
The scheme sees the government pay 80 per cent of wages, up to £2,500 a month, of employees been unable to work because of the Covid-19 outbreak and have been furloughed.