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Coronavirus: Chancellor Rishi Sunak warns up to two million jobs could be lost
15 April 2020, 08:09
The Chancellor has warned of "tough times" ahead, but that he believes the UK economy is "fundamentally sound" and will "bounce back".
Rishi Sunak told the government's daily coronavirus press conference that "these are tough times, and there will be more to come".
His comments come after the OBR said the economy could shrink by up to 35 per cent and two million jobs could be lost due to the coronavirus outbreak.
The Office for Budget Responsibility said the UK unemployment rate, which is currently 3.9 per cent, could more than double to 10 per cent.
When the numbers were put to him, Mr Sunak said they were "not surprising" as the country is dealing with something "unlike anything we have seen before".
He said: "I genuinely don't believe this is a time for ideology or orthodoxy - this is an unprecedented time and unprecedented crisis and that calls for an unprecedented economic response.
"So in that sense it's not surprising to see some of these figures because what we're dealing with here is unlike anything we've seen before which is why we've put in place the measures we have."
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.
Experts at the independent group said unemployment is expected to hit 3.4 million if the lockdown lasts three months followed by a partial lifting for three months.
It said: "As with GDP, the rise in unemployment is likely to be very fast, as the sharp rise in new claims for UC already attests.
"Indeed, we might expect almost all the rise to happen within the first month.
"However, the OBR said on its new prediction, GDP will then jump 25% in the third quarter and a further 20% in the final three months of 2020 - meaning the economy should recover by the end of the year.
The chancellor acknowledged that there will be huge short terms difficulties, saying: "This is going to be hard, our economy's going to take a significant hit and as I've said before that's not an abstract thing, people are going to feel that in their jobs and in their household incomes.
"I think the measures we've put in place will help and then as we get through this it will mean that we can recover quickly and strongly and get our lives and economy back to normal," he added.
The forecaster also stated that the UK's budget deficit could hit £273 billion over the next tax year - five times its previous estimate and equivalent to 14 per cent of gross domestic product.
This would be the biggest deficit since World War Two. It comes as Foreign Secretary Dominic Raab suggested the UK could remain in lockdown for another three weeks.
The OBR also said public sector net debt could exceed 100% of gross domestic product during the 2020/21 financial year but end it at around 95% of GDP.
Before the crisis, the OBR had forecast debt would be 77% of GDP in 2020/21.
It means that the UK deficit would rise to 14% of GDP, and UK national debt would rise to 100% of GDP.
It would mean that this is the largest quarterly contraction since at least 1908, bigger than during The Spanish Influenza, the financial crisis, WW1 or WW2.