Rishi Sunak has warned that the number of unemployed in Britain is expected to rise to 2.6 million by mid-2021. In his spending report, the Chancellor said the economic calamity caused by Covid 19 had only just begun. The latest figures show the number has risen by more than 300,000 since last year, and the latest Department for Work and Pensions (DWP) data shows an increase of 1.5 million in the past six months.
In the Commons, he said the Government would spend £280 billion this year to get the country through the coronavirus. He also announced that most public sector workers in low-wage countries would be frozen, but some would get a pay rise. It is unclear how many people could be unemployed by mid-2021, according to Rishi Sunak, head of the Institute for Fiscal Studies.
The document accompanying Mr Sunak’s statement did not mention the government’s decision to extend the current five-year extension of development aid to the European Union until April next year, but it is expected to be reviewed in the new year. The share of national income spent on foreign aid in 2015 / 16 was 0.5 per cent, compared with 1.6 per cent in 2014 / 15, the Office for National Statistics said.
The last time the number of unemployed people in Britain was below 2.6 million between May and July 2012. The figure passed the three million mark for the first time in April 2013, according to the Office for National Statistics (ONS).
The economic damage is likely to be permanent and even if growth returns, economic output is not expected to return to pre-crisis levels until the fourth quarter of 2022, he added. Sunak told lawmakers that the economy is contracting but will grow by 6.6% next year and 7.5% in 2022.
The government’s response to the Covid initiative, which includes furloughs, has led to an increase in the number of public sector workers at a time when tax revenues are falling. The Chancellor is currently planning a £1.5billion cut in government spending over the next three years, but this has been cut to just one year due to the economic turmoil caused by the pandemic. He said Britain is expected to borrow £394billion this year, falling to £164billion next year and £105billion in 2022.
For Labour, shadow chancellor Anneliese Dodds said: “We need a long-term spending review to create the best place in the world to grow old and grow old.
He was criticised for not mentioning Brexit in his speech as Britain will leave the EU single market and customs area at the end of the year. Dodds added: ‘There is still no trade deal and he has criticised the lack of progress in negotiations between the UK and the European Union on the future of our relationship.
How much will the coronavirus cost Britain, and why should we care what Rishi Sunak has to say about it, or how much will it cost the NHS?
The Office for Budget Responsibility says that if no deal is reached and Britain and the EU have to trade under World Trade Organisation rules, including tariffs, real GDP will fall by 2% because of damage caused by the coronavirus. This will remain the case for another year, and then another 1.5% in 2018-19.
A Treasury spokesman said: ‘The Government is confident about the future of the UK, regardless of the outcome of negotiations with Brussels. The Chancellor focused on Covid, whom he described as “the one who matters to people’s jobs today.” He added that decades of spending cuts had exposed public services to “decades of cuts” as he described them, calling them a “simple bitter pill” for those affected.
This government has made the same catastrophic mistakes again and it is making them again, “he said.