Sunak Urged To Extend Furlough After Covid-19 Causes Biggest Annual GDP Fall Of All Time
Chancellor Rishi Sunak is under pressure to extend financial support for workers and businesses after new Office for National Statistics data showed that the UK economy plummeted by a record 9.9% last year.
The fall in GDP in 2020 was more than twice as much as the largest annual fall previously on record, the ONS' Jonathan Athow said as data was published on Friday morning, in a clear sign of the huge impact months of restrictions have had on the national economy.
However, the economy grew by 1.2% in December, meaning the UK is set to avoid a double-dip recession, which is when two recessions take place within a short space of time.
Sunak said the stark topline figure showed that "the economy has experienced a serious shock as a result of the pandemic, which has been felt by countries around the world.
"While there are some positive signs of the economy’s resilience over the winter, we know that the current lockdown continues to have a significant impact on many people and businesses.
“That’s why my focus remains fixed on doing everything we can to protect jobs, businesses and livelihoods".
The grim update on the state of the UK economy came on the one-year anniversary of Sunak becoming Chancellor of the Exchequor, replacing predecessor Sajid Javid.
The next major event in his calendar is the Budget on March 3, with business groups and opposition parties urging him to extend financial lifelines for businesses and workers.
Shadow Chancellor Annelise Dodds said: "These figures confirm that not only has the UK had the worst death toll in Europe, we've experiencing the worst economic crisis of any major economy".
She called on Sunak to confirm now whether he would be extending financial lifelines for businesses and workers, with Labour urging the government to extend the furlough scheme for out-of-work employees as well as business rate and VAT relief for companies and hospitality firms.
"Businesses can't wait any longer," Dodds said.
"The Chancellor needs to come forward now with a plan to secure the economy in the months ahead, with support going hand-in-hand with health restrictions".The Confederation of British Industry (CBI) said Sunak must extend the furlough scheme and suspension of business rates for companies forced to close by the lockdown until the summer.
The policies are currently set to expire in late April and late March respectively.
“Getting the pandemic under control is critical to our recovery, and speedy rollout of vaccines gives us some hope," said Alpesh Paleja, the CBI's Lead Economist. "But until this ends the stop-start cycle of lockdowns, businesses will need support to continue in parallel with restrictions".
He added: “The Budget comes at a critical time for the UK.
"Extending the furlough scheme through to summer and continuing the business rates holiday for another three months will help safeguard jobs, livelihoods and communities across the country".
Boris Johnson did not offer a response on whether the government would extend this financial support when pressed by Labour leader Keir Starmer at Prime Minister's Questions on Wednesday.
The prime minister said the opposition leader must "wait until the Budget," despite warnings that businesses needed certainty as soon as possible in order to prepare.