In just two days 11,000 job losses were announced and only a mad optimist would think that’s the end of the story.
At times it was hard to keep up with the grim news this week – 5,000 jobs going at fast food store Upper Crust, 300 at Virgin Money, Clydesdale Bank and Yorkshire Bank, 700 at Harrods department store, 500 at Top Shop owner Arcadia and unspecified cuts at John Lewis and WH Smith.
The aviation sector has been hit particularly hard with 12,000 jobs cut at British Airways, 3,000 at Rolls Royce, 2,000 at EasyJet and 1,700 at Airbus. The tragedy is that behind every awful statistic is a family wondering how they are going to pay the mortgage and looking up the number for the local food bank.
The true scale of the havoc done to the economy by the coronavirus pandemic is quickly becoming apparent – and the sad truth is that this will probably do at least as much lasting damage to people’s lives as the actual disease, dreadful though that is.
In April the economy shrunk by more than 20 per cent – absolutely unprecedented figures. The UK workforce declined by 600,000 between March and May – again the sort of figures we have not witnessed in modern times.
To make matters worse, the massively expensive furlough scheme is beginning to be wound down and the fear is many of those on the scheme will find themselves unemployed once the taxpayer subsidies are withdrawn. The jobless figures are likely to rise even further.
Andy Haldane, chief economist at the Bank of England, tried to lift the gloom this week by suggesting that a “v-shaped” recovery could be swift. But even if GDP bounces back quickly, many of those jobs will be lost permanently and unemployment has a lasting and devastating impact on people’s lives.
In the small Yorkshire market town where I live, I know of several small businesses – the bedrock of our prosperity – that will not re-open their doors.
I suspect family firms operating on desperately tight margins have been hard hit by the pandemic. Sadly, there will be more empty shops, pubs, restaurants and cafes in our high streets in future.
Boris Johnson tried to cheer us all up this week with his typically ebullient “Build, Build, Build” speech, in which he pledged an extra £5bn to build new homes and infrastructure in a move inspired by President Franklin Roosevelt’s New Deal in 1930s America.
But welcome though this spending is, it is unlikely to be anywhere enough given the scale of our problems. For example, Roosevelt’s New Deal involved spending more than five per cent of GDP every year, while the Prime Minister’s proposals are less than a quarter of one per cent.
To be fair to Johnson, the pandemic has curtailed many of the available options. Government expenditure is going to rocket while revenue will drop like a stone.
The take from Corporation Tax, for example, will slump because companies are less profitable, and income tax will decline because of the rise in unemployment. Income from indirect taxes, such as VAT, fuel and alcohol duty will also decline because people were not spending as much when they were confined to home.
At the same time, the Government’s spending will rise, not least due to the furlough scheme and with record rises in claims for Universal Credit, benefit spending will go through the roof.
There are no easy options, but the last thing we want is tax rises – exactly the course recommended by Labour’s Shadow Chancellor, Anneliese Dodds. That is like slipping a couple of house bricks into the backpack of a drowning man.
All eyes now shift to Richmond MP Rishi Sunak who has cut an impressive figure since being unexpectedly catapulted into the role of Chancellor earlier this year.
He is planning an emergency statement, possibly as early as next Wednesday, in an effort to save two million jobs and kickstart the economy.
I don’t know how he will do it, but I am praying this adopted son of Yorkshire can perform some miracle to get Britain back to work.
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