Bank worried three million will lose jobs

BRITAIN is in the depths of the worst economic slump for 300 years, which could soon leave more than three million people out of work, it is feared.

The Bank of England believes the period April to June will mark the low point of a record recession.

The predicted 25 per cent collapse over these months would be four times worse than the six per cent slump in the financial crisis of 2008, till now the biggest recession since the Second World War.

Philip Shaw, from City of London experts Investec, warned Britain was at the “epicentre of the weakness”.

The Bank’s warning is based on lockdown easing in June.

Even so, it predicts joblessness will soar from four to nine per cent, the highest for 26 years – leaving more than three million out of work.

That is on top of the more than six million furloughed by the Government.

The Bank warns house prices could tumble by 16 per cent, with inflation predicted to drop to near zero.

TAXES

Even though the Government has pledged hundreds of billions of pounds to save firms, it is feared the economic shock will trigger a wave of company collapses.

However, the Bank is also forecasting a dramatic V-shaped recovery once the lockdown is gradually lifted.

After a predicted 14 per cent plunge this year, it believes the economy will leap 15 per cent in 2021, its biggest annual gain since 1704.

But Investec’s Mr Shaw warned: “There is plenty that could go wrong. The Bank assumes the UK and EU will agree a free trade agreement by the end of this year.”

Salford Business School’s Dr Maria Rana added: “A lot will depend on the ability to avoid a second coronavirus wave, which would require stricter lockdown measures.”

Chancellor Rishi Sunak may have no choice but to raise taxes in the autumn.

George Bull, of tax experts RSM UK, said: “The Government has been successful in getting people to adhere to unprecedented social distancing rules.

“They will be betting on winning similar support for something as unpopular as raising taxes, which this party promised it would not do.”