Two million could lose jobs amid Covid-19 crisis, watchdog warns

More than two million people could lose their jobs and the economy may fall off a cliff edge because of the coronavirus lockdown, the UK's fiscal watchdog has said – as the Chancellor warned of "tough times" to come.

The Office for Budget Responsibility (OBR) said unemployment could hit 3.4 million – up from 1.3 million – leaving around one in 10 of the working population without a job, while the economy may shrink by 35% between April and June.

Rishi Sunak said not every business or household could be protected, but that a "bounceback in growth" was expected when the crisis eases.

30 PHOTOS
Pictures of the week: April 12 - 18
See Gallery
Pictures of the week: April 12 - 18
A stall holder in a protective face mask in Brixton Market in South London, as the UK continues in lockdown to help curb the spread of the coronavirus.
The government's message: 'Stay Home, Protect the NHS, Save Lives' is shown in lights on the rotating display near the top of the BT Tower in the Fitzrovia area of London as the UK continues in lockdown to fight the coronavirus pandemic.
The scene in Cleethorpes as the UK continues in lockdown to help curb the spread of the coronavirus.
Visitors to Greenwich Park in south east London take their daily exercise and photograph the cherry blossom in the Royal Park as the UK continues in lockdown to help curb the spread of the coronavirus. PA Photo. Picture date: Thursday April 16, 2020. See PA story HEALTH Coronavirus. Photo credit should read: Stefan Rousseau/PA Wire
A woman in a protective face mask walks through Brixton Market in South London, as the UK continues in lockdown to help curb the spread of the coronavirus.
A woman walks past NHS tributes which are painted on pillow cases attached to the fence at Elder Park in Glasgow as the UK continues in lockdown to help curb the spread of the coronavirus.
A woman runs alone on Worthing beach in front of Worthing Pier to get her daily exercise and obey social distancing instructions as the UK continues in lockdown to help curb the spread of the coronavirus.
A person walks past a boarded up Debenhams, Oxford Street, London as the UK continues in lockdown to help curb the spread of the coronavirus.
A large display thanking the NHS at Wandsworth roundabout as the UK continues in lockdown to help curb the spread of the coronavirus.
A temporary morgue on Wanstead Flats in East London as the UK continues in lockdown to help curb the spread of the coronavirus.
A man plays football in front of graffiti reading Stop 5G Paranoia on Wanstead Flats in East London as the UK continues in lockdown to help curb the spread of the coronavirus.
A view along Oxford Street, London, looking from Oxford Circus towards Centrepoint, as the UK continues in lockdown to help curb the spread of the coronavirus.
Head falconer Chris O'Donnell with a White-tailed Sea Eagle at Warwick Castle, Warwick, home to the UK's biggest birds of prey show. The castle's birds are unable to give their regular displays as the UK continues in lockdown to prevent the spread of coronavirus.
A Virgin Atlantic charter flight lands at Heathrow Airport, London, delivering vital medical supplies to UK from Shanghai. Itis one of eight cargo-only flights, in partnership with the Department of Health and the NHS, that Virgin Atlantic is operating during April.
Mounted police officers speak to people on Primrose Hill, London, as the UK continues in lockdown to help curb the spread of the coronavirus.
A Virgin Atlantic charter flight lands at Heathrow Airport, London, delivering vital medical supplies to UK from Shanghai. Itis one of eight cargo-only flights, in partnership with the Department of Health and the NHS, that Virgin Atlantic is operating during April.
Hand painted pictures of colourful rainbows are displayed on the door of a home in South London as the UK continues in lockdown to help curb the spread of the coronavirus.
People wearing protective masks whilst shopping in South London as the UK continues in lockdown to help curb the spread of the coronavirus.
Colourful signs in a shop window say 'stay home', 'protect the NHS' and 'save lives' as the UK continues in lockdown to help curb the spread of the coronavirus.
A man walks past a 'we are closed' sign at Crabshack in Worthing as the UK continues in lockdown to help curb the spread of the coronavirus.
Bobby (no surname given) feeding a peanut to a squirrel in St James's Park, London, as the UK continues in lockdown to help curb the spread of the coronavirus.
A boy on his BMX rides up a ramp as he gets his daily exercise in a skatepark while the UK continues in lockdown to help curb the spread of the coronavirus.
Police monitor people on the Long Walk in Windsor, as the UK continues in lockdown to help curb the spread of the coronavirus.
Two people practice social distancing while talking to each other sitting on benches in Clevedon on Easter Bank Holiday Monday at midday, as the UK continues in lockdown to help curb the spread of the coronavirus.
A deserted M5 motorway near Clevedon on Easter Bank Holiday Monday at midday, as the UK continues in lockdown to help curb the spread of the coronavirus.
EDITORS NOTE: NUMBER PLATES PIXELATED BY PA PICTURE DESK Picture taken at 08:50 at a drive-in Covid-19 testing centre at Leeds Temple Green Park and Ride, part of the Government's UK-wide drive to increase testing for thousands more NHS workers.
Members of the public in the Meadows in Edinburgh as the UK continues in lockdown to help curb the spread of the coronavirus.
Cones and beach detritus block the entrance to a car parking section of beach around midday on Easter Sunday at Weston-super-Mare as the UK continues in lockdown to help curb the spread of the coronavirus.
A woman prays at the closed doors of Westminster Cathedral ahead of the Easter morning mass, London, as the UK continues in lockdown to help curb the spread of the coronavirus. Churches across the country have been continuing to broadcast services digitally in the lead-up to Easter, with more than 1,000 livestreams taking place on a regular basis.
A woman prays at the closed doors of Westminster Cathedral ahead of the Easter morning mass, London, as the UK continues in lockdown to help curb the spread of the coronavirus. Churches across the country have been continuing to broadcast services digitally in the lead-up to Easter, with more than 1,000 livestreams taking place on a regular basis.
HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

It came as the death toll for patients in hospital who tested positive for coronavirus rose above 12,000, while ministers faced pressure from Labour to publish their lockdown exit strategy this week. In other developments:

– A survey by the British Chambers of Commerce suggested around one in three British businesses has furloughed between 75% and 100% of its workforce due to the coronavirus crisis.

– The International Monetary Fund projected that the global economy would suffer its worst year since the Great Depression in the 1930s, shrinking by an estimated 3%.

– Sir Simon Stevens, chief executive of NHS England, is reported to be the latest senior figure leading the UK's response to the crisis to have suffered from coronavirus. The BBC said he had self-isolated for just over a week.

HEALTH Coronavirus OBR
(PA Graphics)

In its first estimate of the economic toll taken by the crisis, the OBR said public sector net borrowing is expected to increase by £218 billion this year, compared with March forecasts, hitting £273 billion, or 14% of GDP.

"That would be the largest single-year deficit since the Second World War," the independent forecaster said.

"The sharp rise in borrowing this year largely reflects the impact of economic disruption on receipts (with smaller effects from policy measures like the business rates holidays) and policy measures that add to public spending (with smaller effects from higher unemployment)."

It based the outlook on a scenario where the lockdown lasts three months followed by a partial lifting for three months, but said, in this case, that there would be a sharp bounceback in the economy, with gross domestic product likely to jump 25% in the third quarter and a further 20% in the final three months of 2020.

Mr Sunak told the daily Downing Street press conference: "These are tough times and there will be more to come. As I have said before, we cannot protect every business and every household.

"But we came into this crisis with a fundamentally sound economy, powered by the hard work and ingenuity of the British people and British businesses.

"So while those economic impacts are significant, the OBR also expects them to be temporary, with a bounceback in growth."

It came as Labour leader Sir Keir Starmer added his voice to calls for the Government to publish its exit strategy from the lockdown this week.

In a letter to Dominic Raab, who is deputising for Boris Johnson, Sir Keir said Labour would support the Government if, as is expected, it keeps the current measures in place.

But he said: "The question for Thursday therefore is no longer about whether the lockdown should be extended, but about what the Government's position is on how and when it can be eased in due course and on what criteria that decision will be taken."

A Government source said talk of an exit strategy before the UK has reached the peak "risks confusing the critical message that people need to stay at home in order to protect our NHS and save lives".

Elsewhere, Health Secretary Matt Hancock said all care home residents and social care staff with coronavirus symptoms will be tested as capacity increases.

In our scenario, the shock to the economy and the huge Government policy response raise this year's budget deficit by around £220bn to around 14% of GDP and public debt to around 100% of GDP. #OBRcovidscenariopic.twitter.com/TJBOXgui5w

— Office for Budget Responsibility (@OBR_UK) April 14, 2020

He also vowed to provide tests for all potential care home residents before they are discharged from hospital.

It follows intense criticism of the Government's treatment of the sector, with claims it has been forgotten as the disease spread.

On Tuesday, figures released by the Office for National Statistics showed that 16,387 people died in England and Wales in the week to April 3 – an increase of 5,246 deaths compared with the previous week and 6,082 more than the five-year average.

Covid-19 was mentioned on 3,475 death certificates in the same week, including hospital, care home and community deaths.

But care home providers have warned they are seeing a higher number of cases and deaths than are officially reported, in part due to a time lag with the ONS figures.

The Department of Health and Social Care told the PA news agency on Tuesday lunchtime that there had been coronavirus outbreaks at 2,162 care homes in England.

Read Full Story Click here to comment

FROM OUR PARTNERS