Former Chancellors warn UK economy may never fully recover from coronavirus crisis

BRITAIN'S economy might never recover fully from the coronavirus crisis and Britain will not enjoy a “V-shaped bounce,” three former Chancellors have warned.

Labour’s Alistair Darling, who was Chancellor during the last recession, said whether the economy recovers at all will “depend on decisions the Government takes in the next three to four weeks.”

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He added: “The decisions we take in the next few weeks are going to be critical.”

In a worrying prediction he predicted the best we can hope for is the economy mirroring an L-shape - adding: “Perhaps with the last bit curving up”.

Lord Darling predicted the economy will take much longer to recover from the coronavirus crisis than the 2008 financial crisis. The economy didn’t start growing again after that recession until 2010.

Suggesting that we might have to wait until the mid-2020s to see the economy bounce back after the coronavirus crisis, the ex-Chancellor told a webinar hosted by the Tony Blair Institute: "I’m afraid this is much, much worse because we’re not yet in control of events."

His gloomy outlook was echoed by two former Tory Chancellors, who warned that the economy will take years to recover fully.

Ken Clarke, who was Chancellor in the 1990s, told the Evening Standard: "The next two or three years will be taken up with getting the economy back on its feet.

"There won't be a V-shaped recovery. Some sectors may bounce back but it will take time and we will have an economy saddled with high debt."

"A return to normality is going to take quite a considerable length of time, not least as well because it depends what the state of the global economy is."

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His predecessor Norman Lamont warned of mass job losses, with companies “finding they can operate with fewer people,” while some businesses will disappear completely.

He told the Evening Standard: "The economy will be changed and there will be scars."

Meanwhile, Britain’s biggest banks such as Lloyds, HSBC and Barclays were criticised for failing to help out crippled economies yesterday after it emerged that only half of coronavirus loans have been approved.

Six in ten of the loans approved so far have been from Natwest.

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The majority state-owned bank has handed out about 15,000 of the 25,262 loans under the Government’s Coronavirus Business Interruption Loan Scheme.

The FSB’s Martin McTague blasted the other major banks, who he said had “found it extremely difficult to respond to the pressure they’re under”.

British Chambers of Commerce boss Adam Marshall piled further pressure on the Chancellor to allow firms to furlough staff part-time as they start to return operating.