The UK is likely to suffer a bigger economic hit from the coronavirus crisis than any other nation in the developed world, according to a new report.
The Organisation for Economic Cooperation and Development (OECD), which has 37 member countries regarded as the most economically developed, highlighted an estimated 11.5 per cent fall in the UK’s national income or GDP in 2020.
This means the UK is expected to fare worse amid the global pandemic than France, Italy, Germany, Spain, the US, Brazil and a number of other wealthier nations.
The OECD looked at both scenarios for a single lockdown and if these countries were forced to implement a second lockdown in the event of another peak in the virus. It found that if the UK must go into a second lockdown later this year, its economy could contract in 2020 by an astonishing 14 per cent – in line with an earlier prediction in May from the Bank of England.
The OECD outlined its global analysis in the video below:
Job losses mounting
The latest global economic predictions come at a time when at the very least 10,000 job losses were announced in the UK in the last week alone. Some of the biggest job loss announcements of the week include Rolls-Royce, which announced 3,000 job losses, the Restaurant Group, which announced another 3,000, and British Gas-owned Centrica saying it will slash 5,000 jobs.
The OECD predicts that in a single lockdown scenario, 2.4m jobs will have been lost in the UK by the end of the year.
The OECD’s UK economist Jon Pareliussen explained why he thought the UK was particularly hard hit by the coronavirus crisis – and why it is expected to fare twice as worse economically than other countries globally.
“The UK is among the hardest hit countries,” he told the Telegraph. “There are several reasons for that – one is the economic structure because the UK is heavy on services so that makes it vulnerable to this virus.
“It is also hard hit by the disease, which makes people adapt in their own right, and as a consequence of being hard hit by the disease the containment policies are also strict out of necessity.”
A separate analysis from ManPowerGroup earlier this week found that the outlook for UK jobs this year is the bleakest since records began in 1992.
Their survey found that employers across all sectors are more likely to fire than hire people over the next three months, as businesses are faced with the gradual winding down of the government’s jobs retention scheme, where the state has covered 80 per cent of wages for workers who have been furloughed.
New figures show that nearly a fifth of workers in some areas of the UK have been furloughed, which may pinpoint areas that could see significant job losses once the furlough scheme ends.
In Tottenham, north London, for example, more than 25,000 people have been furloughed, which represents more than 17 per cent of the population there. In Crawley, where a significant number of people are employed in the hard-hit aviation sector, nearly 18 per cent of people are furloughed.
Responding to recent job loss announcements which are mounting each and every week, Unite assistant general secretary for manufacturing Steve Turner said, “It’s another grim week for working people and this is while the jobs retention scheme is still in place, in full. We dread to think what will happen when furlough tapers off so we cannot understand the delay on the support for sectors supporting the jobs of millions of people like auto manufacturing and aerospace.
“Across the Channel, the French and German governments are pressing on with investment and support for economically key sectors, securing jobs and skills, boosting confidence and making them attractive places to base a business,” he added. “We urgently need the UK government to provide the same level of support for and faith in UK workers or the jobs loss tsunami we fear will sweep through our towns and communities this summer.”
OECD chief economist Laurence Boone highlighted the need for governments across the world to support people who desperately need help and to build a long-term vision for their economies.
“Higher public debt cannot be avoided, but debt-financed spending should be well-targeted to support the most vulnerable and provide the investment needed for a transition to a more resilient and sustainable economy,” she said.
“Governments must seize this opportunity to build a fairer economy, making competition and regulation smarter, modernising taxes, government spending and social protection,” she added. “Prosperity comes from dialogue and co-operation. This holds true at the national and global level.”
Taking the time now to build a ‘more sustainable’ and ‘fairer’ economy as Boone highlighted has long been Unite’s argument which the union again made today (June 11) after a new report on green jobs was published.
The report from the Local Government Association (LGA) found that nearly 700,000 jobs could be created within the next decade as part of England’s low-carbon and renewable energy economy. This could rise to more than 1m jobs by 2050.
The LGA said that as demand for green jobs skyrockets over the coming years as the UK moves towards a net zero economy, this could help to counterbalance the ‘unprecedented job losses’ amid the coronavirus pandemic.
While Unite’s Steve Turner welcomed the opportunities this could represent, he warned there will not be a green jobs revolution without government support.
“The government has a vital role to play in sparking the revolution to green jobs,” Turner noted. “We urge it to step up to the plate now so we can arrest some of the huge damage this virus is doing to the economy and jobs as we plan to recover and rebuild.
“With rapid investment the UK could leap ahead with the infrastructure needed to transition our economy, greening our homes, providing the battery manufacturing capabilities and national charging network necessary to support the transition to electric vehicles,” he added.
“With an aviation plan, including an aircraft scrappage scheme, we can protect engineering jobs and put greener, cleaner planes in the air.
“Through carbon capture and green energy generation projects, we can produce the hydrogen we need to replace natural gas and the heat pump and energy storage equipment necessary to go reach our carbon net zero targets,” Turner went on to say.
“It’s also high time that this country built its own electric cars and commercial vehicles along with the components necessary to bring them to market. We can and do produce the fibre optic cabling needed to bring broadband into our homes, so let’s stop the madness of importing it from the USA.
“We have to be able to stand on our own two feet, manufacturing locally supporting our regions, town and cities, protecting UK jobs and skills for the future. We can do this with a plan and a coordinated, government-led industrial strategy to deliver real change.”