Chancellor Rishi Sunak has poured cold water on hopes that the UK economy will make a rapid recovery from the sharp economic downturn caused by Covid-19.
Speaking in front of the Lords economic committee today, Sunak warned it was “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.”
The chancellor said the UK was facing “a severe recession the likes of which we haven’t seen” in the wake of the coronavirus pandemic.
“Although we have put unprecedented mitigating actions in place, I certainly won’t be able to protect every job and every business,” he said.
“We’re already seeing that in the data, and no doubt there will be more hardship to come. This lockdown is having a very significant impact on our economy.”
It came after new data published earlier today revealed UK jobless claims soared 69.1 per cent — or by 856,000 — to 2.1m in April.
The Office for National Statistics (ONS), which compiles the figures, estimated an unemployment rate of 3.9 per cent between January and March, slightly higher than the previous quarter.
But Sunak today warned that the UK unemployment rate was likely to be in double figures by the end of the year.
The chancellor’s stark warning will dampen hopes that the UK economy will bounce back quickly from the downturn once lockdown restrictions are lifted.
Prime Minister Boris Johnson has already urged millions of people to return to work, with sectors such as construction, manufacturing and TV production all restarting work.
It is hoped some non-essential retailers will be able to reopen from the beginning of June, while cafes and restaurants have been told they will be not able to open their doors until July at the earliest.
But Sunak today warned that it would not be an immediate return to business as usual, but rather a gradual resumption of trading dictated by social distancing measures.
“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.