It’s official: the UK is now in recession for the first time since the global financial crisis.
A recession of any kind is bad news, but the figures released this morning show this is the worst we’ve ever seen.
Our economy shrank by 20.4% between April and June, the largest fall on record.
When politicians talk about our economy, it can feel distant and remote: interest rates and budgets and spreadsheets. It’s anything but.
The economy is our jobs and family incomes, our high streets and our communities – the things that add meaning and character to the places we live and love.
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It is small business owners who put their life and soul into building their businesses.
That’s why today’s figures matter so much. Each percentage point fall will mean more jobs lost, harder times for families up and down the country, businesses closing and high streets devastated.
Nearly three-quarters of a million jobs have gone since March. Every single one is a tragedy.
This economic crisis isn’t just about coronavirus. Things are worse here in the UK than in other countries. No other major economy in Europe is experiencing a recession as deep as ours.
This pill could be slightly less bitter if it at least meant we were keeping our friends and family safe from the virus. Except we don’t just have the worst economic track record in Europe, but the highest excess death rate in 2020 too.
That’s a double tragedy for the British people, and one that Boris Johnson has to take responsibility for.
His government was too slow on testing, too slow into lockdown and too slow to protect jobs. So when we finally went into lockdown it was longer than in many other countries – and that meant businesses and jobs took a much bigger hit.
Labour is now calling on the Government to change course and get a grip on the crisis. We need a ‘Test, Trace and Isolate’ system that actually works.
A downturn was inevitable after lockdown – but Johnson’s jobs crisis wasn’t
And the prime minister needs to think again on the one-size-fits-all withdrawal of wage support for workers. No one is arguing that the furlough scheme should go on forever, but different parts of our economy are being hit worse than others.
Today’s stats make that clear: in the first half of this year, British factories produced fewer cars than at any time since 1954. The building of new private homes fell by more than half.
It’s obvious to everyone but the Government that some sectors of the economy and some parts of the country still under lockdown haven’t been able to return to business as usual.
Some firms haven’t been able to open their doors again at all. They need targeted wage support, not the rug pulled from under their feet.
That is why I have urged Chancellor Rishi Sunak to think more creatively about how to help people through this crisis.
There are lessons we could learn from other countries like Germany, where targeted and temporary state support means firms are able to flex workers’ hours but maintain a higher proportion of their wages.
Instead he’s ploughing ahead with a one-size-fits-all approach. At last month’s summer statement, the Chancellor cobbled together a plan to hand over billions of public money in £1,000 ‘bonus’ payments to firms that were planning to bring back their workers anyway.
That money would have been much better spent targeting support to those people who really needed it.
Sadly, more than 20,000 more jobs have been lost or put at risk since that day – and that could just be the tip of the iceberg. If things don’t change soon, Britain’s jobs crisis will only get worse.
But we know that the Chancellor only got his job on condition of doing what he’s told by Number 10. So it’s up to the prime minister to pick up the red phone to the Treasury and tell Rishi Sunak to change course.
It’s still not too late. If Mr Johnson was looking for a sign that it’s time to get a grip on the health and economic approach to this crisis, today’s figures don’t come much clearer.
A downturn was inevitable after lockdown – but Johnson’s jobs crisis wasn’t.
Now he must take responsibility, scrap the one-size-fits-all withdrawal of wage support and bring the health crisis properly under control.
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