New data from the UK Office for National Statistics is expected to show a significant increase in unemployment during April.
New data from the UK Office for National Statistics is expected to show a significant increase in unemployment during April. It is estimated that up to 650,000 people applied for jobless benefits last month as a result of the COVID-19 pandemic.
After Prime Minister Boris Johnson imposed a mandatory national lockdown in March, the Bank of England estimated that the economy had shrunk by 25% in the second quarter and would see a total contraction of 14% in 2020. Between a third and half of the workforce is currently unemployed, furloughed, or working reduced hours. By the end of the spring, unemployment is likely to reach 9%, the highest rate since 1994.
As social distancing measures ease, the bank predicts that the UK economy will recover swiftly, assuming an orderly Brexit deal with the EU and no second wave of infections in the fall. Considering the precariousness of these assumptions, future economic difficulties cannot be ruled out.
In response to the economic downturn and rising public-spending deficits, Johnson is unlikely to repeat the controversial austerity policies of his predecessor, David Cameron. Instead, the government is likely to focus on fulfilling promises to “level up” the UK’s transport and digital infrastructure in order to mitigate unemployment. Expect arguments in favour of stimulating the economy to overwhelm concerns about fiscal deficits in the government’s future economic decisions.
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