Rishi Sunak is coming under renewed pressure to extend the furlough job retention scheme beyond April after new figures which show that the economy crashed by 9.9 per cent in the last year.
Figures from the The Office for National Statistics stated the economy shrunk at the fastest rate since the 1920s last year as the coronavirus pandemic forced thousands of businesses to remain closed for several months.
The 9.9 per cent fall marks the worst year for the UK economy since Gross Domestic Product, GDP, started being used as a record of performance after WWII.
Last year’s contraction is steeper than almost any other big economy, although Spain suffered an 11 per cent decline.
Chancellor Rishi Sunak said the figures revealed the “serious shock” the pandemic has had on the economy.
He added: “At the Budget I will set out the next stage of our plan for jobs, and the support we’ll provide through the next phase of pandemic.”
But trade unions said with millions of jobs in the balance the chancellor had to act immediately to end “uncertainty and anxiety”.
TUC General Secretary Frances O’Grady said: “The more people we keep in work, the faster we can recover. The Chancellor must urgently extend full furlough support to the end of the year to keep jobs safe.
“And he must cancel the pay freeze that is due to hit millions of key workers in April. The last thing our businesses and high streets need is to have consumer spending held down when they are trying to recover.”
Much of the damage to the UK economy is because of a high dependence on the service sector, which suffered particularly badly during the year because of lockdown.
Anneliese Dodds MP, Labour’s Shadow Chancellor, said: ” Businesses can’t wait any longer. The Chancellor needs to come forward now with a smarter furlough scheme alongside an extension to the business rates holiday and the vital VAT reduction for hospitality and tourism to give businesses breathing space.”
SNP Treasury spokeswoman Alison Thewliss MP said: “Just when the UK economy has suffered a record slump, the Chancellor is threatening the recovery with damaging Tory austerity cuts. The UK is now among the worst performing countries in the OECD due to the decisions made by this Tory Government.”
Experts predict that the UK’s rapid vaccinating programme could lead to easing restrictions and predictions of a rapid economic recovery.
The Bank of England’s chief economist Andy Haldane said on Thursday that consumer confidence would surge back thanks to the vaccine programme and the economy would be firing “on all cylinders” by spring.