‘Difficult days’ ahead if economy does not pick up after coronavirus hit

Pressure on Prime Minister Boris Johnson to ease lockdown restrictions intensified as new figures laid bare the damage being caused to the labour market.

Official statistics showed a sharp drop in the number of paid employees – down by 2.1% or 612,000 in May compared with March – and a huge increase in benefit claims.

Although the UK jobless rate remained largely unchanged quarter on quarter at 3.9% in the three months to April, with unemployment at 1.34 million, there are fears that more redundancies could follow as Government support is withdrawn over the coming months.

The Office for National Statistics figures will weigh heavily on ministers as they consider whether to ease the two-metre social distancing rule, one of the main barriers to fully reopening the economy.

ECONOMY Unemployment
(PA Graphics)

The next potential easing of the lockdown in England could take place on July 4 if the coronavirus outbreak is under control, with pubs and restaurants in line to reopen.

Cabinet minister Grant Shapps acknowledged that the two-metre rule would make it impossible for some parts of the hospitality industry to function.

He said “difficult days would lie ahead” if the economy does not pick up, and people who are on the furlough scheme, which ends in October, are “concerned about the future of their employment”.

The Government faces the task of “restarting the economy but without restarting the virus”, he told BBC Radio 4’s Today programme.

“You have got to make judgment calls about whether two metres, for example, needs to remain in place or whether you can bring it down.”

A comprehensive review has been launched into the two-metre rule, including looking at European countries which have smaller distances as part of their coronavirus restrictions.

Mr Shapps said the country cannot afford to run the risk of a second peak in the virus.

But he added: “I also understand the figures – a third of pubs might be able to open and break even at two metres but three-quarters could at a metre.”

Transport Secretary Mr Shapps said that only 15% to 20% of passengers are allowed on trains, buses or trams due to the restrictions and “no-one would love it to come down to a metre more than me”.

But the data is not straightforward and the virus is “many times more spreadable” at a metre than at two metres.

“However, if there isn’t much of the virus in society, then that may not matter very much on their overall picture,” he said.

Mr Johnson was chairing a Cabinet meeting on Tuesday morning and is also set to face MPs to discuss his vision of a “global Britain” – at a time when travel restrictions remain in place and visitors coming to the UK face a fortnight in quarantine.

The ONS figures showed a decline in hours worked by people in jobs, while jobless claims under Universal Credit jumped 23.3% month on month in May to 2.8 million and soared 125.9% or 1.6 million since March when the UK was placed in lockdown.

ONS deputy national statistician Jonathan Athow said: “The slowdown in the economy is now visibly hitting the labour market, especially in terms of hours worked.”

Asked if May unemployment figures could reach around 5%, Mr Athow said: “That would certainly go in that direction if that 600,000 reduction in payroll goes through into unemployment.

“We haven’t quite seen the downturn feed through into unemployment yet.”

Data published last week revealed that the UK’s economy shrank by 20.4% in April – the largest monthly contraction on record – as the country spent its first full month in lockdown.

Amid the economic fallout, Tory grandees have called on the Prime Minister to ease the extent of the restrictions currently in place.

Writing in the Daily Telegraph, former Conservative Party leader Lord Hague said that lockdown was a “disaster (that) cannot under any circumstances be repeated”.

Hague covid
Lord William Hague has urged the Government to reduce the two-metre social distancing rule (Victoria Jones/PA)

The former foreign secretary said it is “not necessary to have a two-metre separation between people to keep the virus in retreat where it is already at a low level” and cited the experience of the likes of Denmark, France and Germany where the “recommended distance is shorter” than in the UK.

Shadow chancellor Anneliese Dodds called for an emergency “back to work” budget focused on saving jobs.

“The Government was too slow to recognise the scale of the health crisis from coronavirus and we are already paying the economic price,” she said.

“We are increasingly worried that the slow and confused health response is now being followed by a slow and confused response to saving jobs.”

Among other developments:

– The Prime Minister faces a growing rebellion after he rejected England footballer Marcus Rashford’s demand to extend its free school meal voucher scheme through the summer holidays.

– The number of deaths involving Covid-19 in the UK has now passed 53,000, according to the latest available data.

– The number of “excess deaths” in the UK since the coronavirus outbreak began has passed 64,000, according to official figures.

– Scientists at Imperial College London will begin testing another possible coronavirus vaccine on humans this week.





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