When Boris Johnson announced the first stay-at-home order, effectively shutting down entire sections of the economy, the tide was expected to turn in 12 weeks. Like many months later, the lockdown measures were relaxed for the third time and Britain still faces a long road to recovery from the worst recession in 300 years.
As restrictions are eased, Bank of England chief economist Andy Haldane warned that despite the economy reopening, the risk of “prolonged Covid-equivalent work” remains for workers across the country. .
Writing in The Guardian to mark a year since the first lockdown, he said that the outlook for the post-Covid transition was set to be smoother than in the 1980s, when the job market took a generation to recover from industrial decline. However, more support is needed for unemployed workers to avoid lasting damage.
“The UK has provided a useful preview of these policies, with new initiatives focusing on vocational training and lifelong learning. But these will need to scale up and expand in scope, to meet the skills challenge facing the UK economy and limit scars in the long run, ”said Haldane.
In the past year, The Guardian has monitored the economic consequences of the pandemic monthly; tracking infection rates, eight key growth indicators, and the FTSE 100 level. Faced with the deepest global recession since the Great Depression, the Covid crisis clock also monitored Britain’s performance compared to other countries.
Layoffs in the UK have risen at the fastest rate on record after economic activity collapsed at an unprecedented rate, and governments around the world use continuous shutdowns to contain multiple waves.
After sending its population back home later than other countries and keeping restrictions in place longer than others last summer, Britain suffered the deepest recession in 300 years. Gross domestic product fell 9.9% in 2020, the worst performance of the G7, thanks to some of the highest infection rates in the world and a larger share of social spending than other nations.
Billions of pounds in support of the state of emergency and trillions injected by central banks into the financial system helped avoid a worse estimate of employment and growth, while the Covid vaccine offers hope for a stronger recovery as the The UK is moving faster than other major economies.
As lockdown measures relax, unemployment in the UK is up to 2 million lower than was feared last summer, helped by the Treasury’s multi-million dollar leave scheme, which has increased wages by more than 11 million jobs since it was launched a year ago.
Retail sales have remained resilient and have seen a strong recovery near pre-pandemic levels amid a boom in online spending, while major stores were forced to close. With repeat closures in the hospitality industry and many people saving money while working from home, retail spending has increased as consumer interest in gardening, biking and DIY skyrocketed during the shutdown.
However, clothing sales plummeted and more than 11,000 chain stores closed for good on Britain’s main streets last year, reflecting the retail industry turmoil that will become clearer as it unfolds. ease restrictions and return shoppers to city centers.
There is hope that a consumer-driven recovery can take hold, fueled by £ 180bn of additional family savings accumulated while spending on commutes, vacations and socializing declined. Tourism and hospitality companies have reported an increase in bookings, in a sign of stifled demand.
However, the savings have been accrued primarily by higher-income households and retirees, as low-wage workers and those with more precarious jobs suffered the brunt of financial damage, increasing the risk of lasting inequality.
Raising hopes for the post-Covid recovery, the unemployment rate fell slightly in January despite tighter restrictions earlier in the year, dropping to 5% from 5.1% at the end of December.
Despite this, the number of workers on leave has reached almost 5 million. After repeated attempts to shut down the plan last fall as layoffs continued to rise, Rishi Sunak used this month’s budget to extend the license until the end of September. With the economy not expected to regain full strength until at least next year, job losses are projected to rise to 6.5% after the plan closes.
Haldane said it should be easier than it was in the 1980s for unemployed workers to transition to new jobs. This was because job losses have been concentrated mainly in the service sector of the economy, where skills are more easily transferable.
However, he cautioned that those hardest hit by the pandemic were younger, less experienced and less skilled workers, and that more was needed to support the transition to a stronger post-Covid economy.
“This means that the risk of workers facing jobs equivalent to a prolonged Covid is considerable. Avoiding that chronic economic pain will require structural policies, focused on skills, equivalent in speed and scale to the demand-side policies already in place, ”he said.