Life will never be ‘normal’ again as global economy will ‘change significantly’ due to coronavirus
THE world will not return to “normal” once the coronavirus crisis has ended because the global economy will have “changed significantly”, the government has said.
In its updated guidance on how it will begin to lift the UK’s lockdown, the government said that the UK will “need to be agile in adapting to and shaping this new world” in order to improve people’s living standards in the years to come.
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It said it was keen to lead work to develop more resilient supply chains so that the country can continue to benefit from "free and open global trading systems" in the years to come.
"The government will also continue to lead work on the international economic recovery, striving to deliver a UK and world economy which is stronger, cleaner, more sustainable and more resilient after this crisis," it added.
According to the latest forecasts from the Office for Budget Responsibility, if the current lockdown measures stay in place until June and are then eased over the next three months, two million more people would be unemployed by the autumn.
The country could also face its worst recession in 300 years, with the economy plummeting by 35 per cent in the second quarter of this year.
Workers in hospitality, tourism and retail could be worst hit as limits continue on foreign travel and spending which isn’t deemed “essential”.
Around 1.8 million households made Universal Credit claims between March 16 and April 28.
The government warned that younger households are also likely to be disproportionately hit in the longer term, as evidence suggests that lost future earnings potential is greater for young people in the years after a recession.
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Ministers have been trying to safeguard jobs by putting in place a number of financial measures to help people who have been affected by the pandemic.
This has included the furlough scheme, and a scheme to pay self-employed people.
At the moment, around 800,000 employers have applied for help to pay the wages of over six million furloughed jobs.
“These measures are extraordinarily costly and cannot be sustained for a prolonged period of time,” the government said in its updated guidance on Monday.
“Precise costs will depend on a range of factors including the impact of the crisis on the wider economy and the level of take up for each scheme.”
The Office for Budget Responsibility has estimated that the cost to the government of the response to Covid-19 could be more than £100bn in the current financial year, it said.
In addition to this, approximately £330bn - equivalent to 15 per cent of GDP - has been made available to business in the form of guarantees and loans.
“So as the UK adjusts the current restrictions, the government will also need to wind down the economic support measures while people are eased back to work,” the guidance said.
It said that the longer the virus affects the economy, the greater the risks of “long-term scarring and permanently lower economic activity, with business failures, persistently higher unemployment and lower earnings”.
This would damage public finances and the ability to fund public services including the NHS, the government warned.
The general population would also be more likely to suffer from physical and mental illness.
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