Economy shrinks by fifth in first lockdown month
THE UK economy contracted by more than a fifth in the first full month of lockdown, as shops and factories closed and workers were sent home, it emerged yesterday.
But First Minister Mark Drakeford defended the Welsh Government’s cautious approach to ending the lockdown, as he urged people to remain patient.
Figures showed 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.
Bank of England Governor Andrew Bailey said he would be “ready to take action” to help the UK economy weather the coronavirus crisis.
“We are still very much in the midst of this,” Mr Bailey said, but added that the figure was “in line” with what the bank expected.
The Office for National Statistics (ONS) said April’s “historic” fall affected virtually all areas of activity, as large parts of the economy remained shut to battle the pandemic.
Reacting to the fall, Mr Drakeford told journalists: “Of course that figure is a very striking and sobering one. I don’t think we can be surprised at it because it reflects a
month when our economy was in lockdown.
“The experts who produced those figures I think are saying today that they expect to see some modest recovery in the month that follows as the economy began to get back into action.
“It does reinforce that we need to use the headroom we have created here in Wales to allow more economic activity to happen. That is my ambition for when I am standing here on Friday next week – to be able to show how we can use the room we’ve created to do that. Coronavirus is a health crisis, but it’s an economic crisis as well.”
Mr Drakeford said the latest evidence from the Centre for Mathematical Modelling of Infectious Disease suggested that the most likely and recent R figure for Wales had fallen from 0.8 to 0.7.
Ten more people have died after testing positive for coronavirus in Wales, according to figures released yesterday.
The total of people with lab-confirmed coronavirus who have died since the outbreak began has hit 1,435, Public Health Wales said.
A further 77 cases of the virus have also been confirmed, pushing the total number of cases in Wales to date to 14,658.
Thirty-two people were being treated in critical care for coronavirus yesterday – lower than last week and the lowest since March 25.
Public Health Wales’ daily figures on coronavirus-related deaths reflect the number of people who have died with lab-confirmed coronavirus which have been reported to them. As it can take two or three days for reports to reach them, the deaths have not all happened in the last 24 hours.
Only two local authorities – Cardiff and Merthyr Tydfil – saw new cases in the double digits, with 11 and 12, respectively.
Though all health board areas in Wales recorded new cases, five local authorities – including Caerphilly, Monmouthshire, Carmarthenshire, Powys and Neath Port Talbot – saw no new cases in the 24-hour period.
It has been confirmed the rate of spread of coronavirus in Wales is the lowest in the UK.
Mr Drakeford said: “Each day we continue to report deaths of Welsh citizens from coronavirus, but while, at its height this reached over 40 people each day, this week the daily figure so far has been below 10.”
The First Minister said the improving position on coronanavirus cases in Wales had been achieved because of “tremendous social solidarity from everyone in Wales in sticking to the lockdown rules”.
He said: “Coronavirus is not over.
We can choose a path in which we regain our freedoms gradually, carefully and safely, using the headroom we have made together – but never taking steps which would knowingly undermine everything we have achieved. Or we could throw it all away, lift the restrictions in a rush and run the real risk that this deadly virus would be on the rise again in Wales.
“As I and my Cabinet colleagues make decisions next week, about the weeks ahead, I want you to know that whatever happens elsewhere and however loud the demands to do things differently may be, we will stick to the path we have chosen.”
Asked what easements may be brought in when the latest lockdown regulations review is due on June 18, Mr Drakeford told the Welsh Government coronavirus briefing: “People will have to manage to be patient for one more week. A week is a lot more conversation, a lot more advice, a lot more information from all the figures and facts that we get through our systems here in Wales. Those decisions will be made next week, not today.”
Statistics released on Thursday showed that more than 315,000
workers in Wales – a quarter of the nation’s workforce – have been placed on furlough since the pandemic’s start, with more than 100,000 claiming selfemployment support.
Asked by the Western Mail what the Welsh Government was doing to mitigate the impact of potentially high numbers of redundancy announcements as the £20bn UK-wide income support scheme winds down – with reduced payments to employers from August and an end to the initiative in October – Mr Drakeford said: “First of all we continue to lobby whenever we can UK Ministers about the way the furlough scheme will develop in future.
“It ought not to be a blunt instrument. Where people are going back to work, there ought not to be a case for continued furloughing. But where there are sectors, in hospitality for example, where there isn’t an immediate prospect of people being able to go back to work, then the furlough scheme needs to continue to be there to support those industries beyond the current time frame and to prevent employers from taking actions that they wouldn’t need to take if they had confidence that the furlough scheme would continue.
“Secondly, we have indicated our intention to open the second stage of our economic resilience fund. We’ve always used that fund to try to fill some of the gaps in UK provision and we paused, we reviewed and we’ve re-tailored the scheme so that in the second phase it will be able to do more to step in. But unless there is more help from the UK Government, then the message we are getting from some big employers, and some small ones as well, is that redundancies become an inevitability for them. They have to give warning and notices, and they’re getting perilously close to where that will be triggered.”
Chancellor Rishi Sunak has previously said: “The UK Government is doing everything we can to protect jobs and businesses in Wales and across the UK during the crisis.”
Asked what hope he could offer the tourism industry in Wales, which fears it is on the brink of collapse, Mr Drakeford said: “I still think that given the position I have outlined today if we’re able to sustain that we will be able to rescue something from this tourist season.
“There are a number of things that will need to be in place, The industry itself will need to prepare to make sure that when we’re able to welcome visitors from within Wales and from beyond Wales back to tourist destinations that they are ready to be able to operate in the way that they will need to to prevent the spread of the virus.
“They will need to speak carefully with their local communities. In the far south west and north west of Wales, where tourism is so important, there have been constant anxieties about people coming from places where the virus has been in much more significant spread and the risks that may bring of taking the virus into areas of Wales where there has been the lowest circulation of it.
“So it’s important that the industry itself secures the consent of those communities, We can’t be in a position where we say ‘Welcome to Wales’, but when you get there you find the welcome isn’t what it needs to be. All that will take time to prepare, so we are hopeful to be in a position to offer the industry some future prospects of opening it up to a safe extent during this summer season. But there’s a lot of work to do to make sure that can be done successfully.”