UK Economy Enters Recession Stemming from Coronavirus Lockdowns

Read also: Small Rise in EU Unemployment Rate Despite Easing Lockdown

So far, the British government has kept a lid on the numbers swelling the ranks of the jobless through a salary support package that has given hard-pressed firms the opportunity to retain workers rather than fire them.

Under the Coronavirus Job Retention Scheme, the government has been paying a large chunk of the salaries of workers retained.

Some 1.2 million employers have taken advantage of the program to furlough 9.6 million people at a cost to the government of 33.8 billion pounds ($44 billion).

Sunak is ending the program in October on the grounds it gives “false hope” to furloughed workers while at the same time limiting their prospects of getting new jobs as their skills fade.

He insisted “nobody will be left without hope or opportunity.”

With unemployment set to soar — some forecasts see it doubling to above the 3 million mark last seen in the 1980s — many are urging the government to extend the furlough program to those sectors that are set to face restrictions for many more months.

“The best way to get our economy back on its feet is to keep people in work," said Frances O’Grady, general secretary at the umbrella Trades Union Congress.

The British economy faces further headwinds over the coming months aside from the pandemic.

There's uncertainty related to its future trading relationship with the European Union following the UK's departure from the bloc in January.

The UK is currently in a transition period whereby it remains part of the bloc's tariff-free arrangements until the end of the year.

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The future economic relationship has yet to be agreed, meaning tariffs could be imposed on traded goods between the two sides come the start of next year.

“The dual threats of a second wave (of contagions) and slow progress over Brexit negotiations are also particularly concerning, underlining the need for maximum agility from government on both these issues, allowing a greater focus on the economy’s long-term future," said Alpesh Paleja, lead economist at the Confederation of British Industry. 

(Writer: Pan Pylas) 

Source: https://apnews.com/c7ebaf291c219dd0909fe11777fc1f24