‘Worst is now starting’ Ken Clarke issues stern warning to Rishi Sunak over UK recession

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Britain has officially entered into the largest recession on record after figures showed the pandemic sent the economy plunging by 20.4 percent between April and June. Speaking to BBC Newsnight, former chancellor Ken Clarke warned the “worst is now starting” and urged Rishi Sunak to launch “targeted support” for jobseekers and businesses as the coronavirus pandemic continues to spread across the country. He said: “The worst is now starting and this autumn is going to be very difficult indeed as Rishi was conceding. It appears that people are going to suffer hardship.

“It will take a few years to get back to a properly healthy economy. Meanwhile we have quite a crisis on our hands and I do agree that it would require more borrowing, more printing of money, I think that’s unavoidable at this stage.

“You’ve got to be careful how you do it because that will become a problem eventually which you’ll then have to tackle in we don’t know how long it will be – two, three years before inflation starts coming back and interest rates start going up.

“Meanwhile, targeted assistance particularly in the job market and to protect the employment for many people as possible and get new employment for them and also very carefully targeted support not for the dying industries trying to keep them open for a bit longer, but for everything that looks like having a proper future.”

He added the Chancellor should not lose sight of the levelling up pledge as some parts of the country were already quite depressed. 

The Office for National Statistics (ONS) confirmed the UK’s nosedive into recession for the first time since the financial crisis after the record-breaking contraction in the second quarter, which follows a 2.2 percent fall in the previous three months.

A recession is defined as two successive quarters of decline in gross domestic product (GDP).

But monthly figures showed the economy bounced back by a slightly better-than-expected 8.7 percent in June, following upwardly revised growth of 2.4 percent in May, as lockdown restrictions eased.

The ONS said the economy is still a long way off from recovering the record falls seen in March and April after tumbling into “the largest recession on record”.

The grim second quarter figures showed the UK suffered the biggest economic hit from the pandemic in western Europe, even beating Spain’s eye-watering 18.5 percent drop.

Chancellor Rishi Sunak said that the ONS figures “confirm that hard times are here”.

“Hundreds of thousands of people have already lost their jobs, and sadly in the coming months many more will.

“But while there are difficult choices to be made ahead, we will get through this, and I can assure people that nobody will be left without hope or opportunity.”

It comes after ONS data on Tuesday showed around 730,000 UK workers have been removed from the company payrolls since March, while employment also dropped by the largest amount in a quarter since 2009 between May and June.

The ONS said the UK economy is now 22.1 percent smaller than it was at the end of 2019 and 17.2 percent below levels seen in February, despite two months of growth since the nadir of the recession in April when the UK was in full lockdown.

Jonathan Athow, deputy national statistician at the ONS, said: “The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record.

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“The economy began to bounce back in June, with shops reopening, factories beginning to ramp up production and house-building continuing to recover.

“Despite this, GDP in June still remains a sixth below its level in February, before the virus struck.

“Overall, productivity saw its largest-ever fall in the second quarter. Hospitality was worst hit, with productivity in that industry falling by three-quarters in recent months.”

Experts said that hopes of a swift V-shaped recovery look dashed, with the Bank of England warning last week the UK could take longer to rebound than previously predicted.

The Bank forecast the economy would not jump back to pre-virus levels until the end of 2021.

The ONS initial second quarter estimate shows that the services sector – which accounts for around three quarters of UK output – dropped 19.9 percent, with the construction sector off 35 percent and manufacturing down 20.2 percent.

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