Economy–but sharp rebound
George Osborne described the predicted scale of the economic hit as “shocking”.
He said: “These figures just show what the overall economic damage of this outbreak and the measures required to deal with it is having.”
He told BBC Radio 4’s World At One programme: “They’re not particularly surprising numbers in the sense that they’ve been out there in the market and other economists have made these predictions, but they’re still shocking numbers.
“This staggering loss of economic output, the staggering increase in the national debt and of course the real tragedy here is a massive increase in unemployment, not all of which comes back. In other words, many people don’t simply get their job back later this year under this scenario and it’s just a reminder that the effects of this virus will be with us long after hopefully we’ve found a cure.”
Mr Osborne said “getting the money flowing” to businesses was “absolutely vital”, adding the “numbers today should be a spur to further action”.
He said: “The Government schemes are what are keeping people in jobs, albeit often furloughed at home not working and are keeping small businesses alive with these loans.
“So these Treasury schemes are absolutely vital, they are the ventilator of the economy and I would say that getting them working properly is now one of the absolute central tasks facing the Government.
“This is no criticism of the Treasury; I worked there for many years, I know they are working flat-out to get these completely unusual, unplanned schemes up and running, but to my mind you’ve got to get the money flowing, particularly to these small businesses, because the longer they wait, and after all we’ve now been in this for at least a month, they’re going to go to the wall because they can’t make certain payments that they’re going to have to make to suppliers or to landlords or whatever.
“That’s when you get – and the OBR today is very clear in the report – the scarring effect, these businesses don’t come back to life later in the year, they’re permanently gone, the jobs that were associated with them are permanently lost.”
Mr Osborne said he “personally would make a tweak to the scheme”, adding: “Just for the smallest businesses and for small loans maybe up to £250,000 you should just say the Government’s going to cover it all.”
He said: “I don’t think we’re heading into a depression but I think things are going to be pretty difficult.”
He warned of the possible long term effects of Covid-19 adding: “It seems to me this virus is not just going to disappear in a month’s time or two months’ time, it’s going to keep coming back until we have a vaccine and so you might get waves, you might get lockdowns coming and going and so I think a more realistic economic scenario is that we’re going to be living with restrictions on the way we do our business for many, many months, not just a couple of months sadly.”
Mr Osborne urged caution over the lockdown exit strategy as he warned the public finances “are going to be permanently worse”.
He said: “No-one wants to hear it but that forces very uncomfortable choices about how the country can afford things in the future and all those difficult trade offs that we had to make years ago.”