A humble Chancellor states the obvious

By Simon Gentry, Newgate Public Affairs

The woeful economic figures from yesterday and the revelation that the economy shrank a staggering 20.4% between April and June compared with the first three months of the year prompted an unusually humble admission from the Chancellor today.

Rishi Sunak admitted what we all know when he said that the government is “grappling with something that is unprecedented” after figures showed the UK economy suffered its biggest fall since data was first collected.

Mr Sunak told the BBC that it was “a very difficult and uncertain time” and repeated his comment that the government should not pretend that “absolutely everybody can and will be able to go back to the job they had”. Hinting at a second budget slated for October, he added there would be support for creating jobs in new areas.

The difficulty the government has is that even by October where the real problems in the economy are will not be clear.  We know that retailers and manufactures have seen a return to pre-lockdown levels of activity, but the entertainment sector, for instance, has not and shows no prospect of being able to return to normality.  Others such as aviation are in a similar plight.

The true scale of unemployment is also disguised by the furlough scheme and will only begin to be seen in November and December when people laid off begin signing on for benefits.

Economic commentators have, however, pointed out that in other countries, the historic falls in economic activity were followed by historically fast growth rates as lockdowns were eased and economic activity returned.

The Labour Party has kept rather quiet when it comes to the economy but today the Shadow Chancellor Anneliese Dodds MP blamed the Prime Minister, Boris Johnson, for the scale of the economic impact, saying: “A downturn was inevitable after lockdown – but Johnson’s jobs crisis wasn’t.”  There are increasing calls from the trades unions for the furlough scheme to be extended for those sectors that are, like live entertainment, unable to return to normal now.