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UK plunged into recession

UK suffers ‘world-beating’ recession worse than any G7 country, as Britain’s excess death toll rises to highest in all Europe
UniteLive, Wednesday, August 12th, 2020


Prime minister Boris Johnson boasted in late May that the government had a ‘world-beating’ track and trace system in the works. Nothing could be further from the truth, as UniteLIVE highlighted yesterday (August 11) the multiple failures of private outsourcing firm Serco overseeing the contact tracing initiative.

But the UK has indeed earned the dubious distinction of being ‘world-beating’ in two respects today (August 12) – new figures released this morning show the UK has suffered the worst recession out of any G7 country amid the coronavirus crisis.

This feat has also come at a time when the UK has also achieved the worst excess death toll out of any country in Europe.

Figures published today from the Office for National Statistics (ONS) showed the UK’s Gross Domestic Product (GDP), the measure usually used to track overall economic prosperity, plunged by more than 20 per cent in the three months to June – the worst fall since records began in 1955.

In addition to a 2.2 per cent GDP fall in the first quarter, the UK is now officially in recession, which economists define as a fall in GDP in two consecutive quarters. Britain’s shambolic economic performance outstrips the US by double after America recorded a 10.6 per cent drop in GDP in the second quarter.

Of those which have recorded second quarter results, every other G7 country – considered among the most economically advanced in the world – has fared better than the UK, including the US, France, Germany and Italy. All G7 countries recorded a 13 per cent or less fall in GDP in the three months to June. The two remaining G7 countries which have not yet posted their official second quarter results, Canada and Japan, are not predicted to have experienced falls in GDP worse than the UK.

Today’s ONS figures also show how different sectors of the economy have been hit – output of the UK’s biggest sector, services,  which includes restaurants, hotels and finance, plummeted by nearly 20 per cent in the three months to June, while construction declined by 35 per cent. The production sector, which includes manufacturing, mining and energy, recorded a 16.9 fall in output.

Highest excess death toll in all of Europe

Meanwhile, just two weeks ago, the UK made global headlines after it emerged that the country has the highest excess death rate in all of Europe from January to June 2020.

The excess death rate measures additional deaths in any given period of time above the average number of deaths expected and is seen as a better indicator of the pandemic’s total mortality – since coronavirus deaths are recorded differently in different countries.

Experts agree that one potential reason behind the high UK excess death rate is the fact that the government waited too long to impose a strict lockdown, while other European countries took quick and decisive action. Professor Neil Ferguson, a former government scientist, estimated that 25,000 lives could have been saved had the UK lockdown been imposed just a week earlier.

Other reasons cited for the UK becoming the country with the highest excess death rate in Europe amid the pandemic include poor PPE provision, especially at the start of the pandemic, slow action on testing, confused public messaging about lockdown measures, as well as a failed contact tracing system, among other reasons.   

Responding to the latest GDP figures as well as the UK’s high mortality rates, Labour’s shadow chancellor Anneliese Dodds said, “We’ve already got the worst excess death rate in Europe – now we’re on course for the worst recession too. That’s a tragedy for the British people and it’s happened on Boris Johnson’s watch.

“The Prime Minister will say there’s only so much he could do during a global pandemic, but that doesn’t explain why our economy is tanking so badly compared to other countries,” she added.

“It was his government that snatched away wage support for businesses that hadn’t even reopened yet. And his government that failed to get test, trace and isolate working despite claiming it’s a ‘world-beating’ system.

“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.”

Furlough scheme extension call

TUC general secretary Frances O’Grady likewise called for the government to extend its wage subsidy programme, known as the job retention or furlough scheme, which is slated to end in October.

“The best way to get our economy back on its feet is to keep people in work,” she said. “The more jobs we protect the faster we’ll recover from this crisis.

“Ministers cannot afford to dither. They must do everything possible to stop mass unemployment.

“That means extending the job retention scheme for companies that have a viable future but need support beyond October. 

“And it means investing in the decent jobs we need for the future in green industries, social care and across the public sector.”

As the UK is plunged into the worst recession in recorded history, on Tuesday (August 11) separate figures from the ONS showed that the scale of the unemployment crisis facing Britain, with nearly three quarters of a million jobs falling off company payrolls between March and July.

Between April and June alone, 220,000 jobs were lost – the biggest quarterly fall since 2009, when the UK was plunged into a global financial crisis.

Meanwhile, the number of people claiming Universal Credit has surged to a total of 5.6m, figures for July show, which is nearly double the claimant number in February of 2.9m.

What’s more, a survey out earlier this week from the Chartered Institute for Personnel and Development (CIPD) found that an astonishing one in three employers say they intend to cut jobs by the end of September – yet more evidence that the furlough scheme’s end will usher in more job losses.

Commenting, Unite general secretary Len McCluskey reiterated the union’s call for an extended and modified furlough scheme.

 “We warned that the tapering of the jobs retention scheme would see redundancy notices fly around like confetti and sadly this is coming to pass,” he said.

“But this crisis is being made infinitely worse by the very different approach the Westminster government is taking to that of our competitor countries where targeted support is helping vital sectors weather this storm, saving jobs in the process,” McCluskey added.

“There are simple effective measures, such as short-time working, that will keep people in jobs and retain skills. But this government lacks the capacity to understand, or the political will to grasp, that this is the moment it must use its vast power of intervention for the collective good of the country.

“This criminal lack of engagement at the heart of the government means workers and their employers are being abandoned by ministers who appear to have no plan for rebuilding and recovering our economy,” McCluskey went on to say.

“This will not be forgotten or forgiven by industries and communities that have long-served our country, and are desperate for the chance to continue to do so, only to be ignored by the government in their hour of need.”

By Hajera Blagg

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