Britain will bounce back with strongest growth since WW2 after economy shrinks by 10% and 700,000 lose jobs, Sunak says

BRITAIN is set to bounce back with the strongest economic growth since World War Two after 700,000 people lost their jobs during the pandemic, Rishi Sunak revealed today.

Announcing his budget this afternoon, the Chancellor said the economy had shrunk by 10 per cent over the last year, but vowed “we will recover”.

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Rishi Sunak has vowed the economy will bounce backCredit: refer to caption.

The Budget book ahead of the announcement todayCredit: Simon Walker HM Treasury

Mr Sunak set out his £65billion three-point plan today to provide support for jobs and businesses as they recover from the coronavirus crisis.

He said the economy is forecast to grow by four per cent this year and by 7.3 per cent in 2022 – the strongest level of growth since 1941.

The Chancellor added that after 2022, the economy is set to grow by 1.7 per cent, 1.6 per cent and 1.7 per cent in the last three years of the forecast.

He said, however, that the Office for Budget Responsibility (OBR) expects the economy will be three per cent smaller than it would have been in five years’ time because of the pandemic.

‘SWIFT RECOVERY’

Speaking in the House of Commons this afternoon, the Chancellor said: “The Office for Budget Responsibility are now forecasting, in their words: ‘A swifter and more sustained recovery’ than they expected in November.

“The OBR now expect the economy to return to its pre-Covid level by the middle of next year – six months earlier than they previously thought.

“That means growth is faster, unemployment lower, wages higher, investment higher, household incomes higher.”

The Chancellor revealed today:

Already, the Government has spent nearly £300billion on pandemic help for millions.

And Mr Sunak said his immediate priority continues to be supporting those hardest hit, with extensions to furlough, self-employed support, business grants, loans and VAT cuts – bringing total fiscal support to over £407 billion.

But he insisted the Government’s interventions to support jobs are already working, with levels of unemployment expected to peak at almost half the level previously thought.

Of the OBR’s forecast, he said: “In July last year, they expected unemployment to peak at 11.9 per cent.

“Today, because of our interventions, they forecast a much lower peak: 6.5 per cent.

“That means 1.8m fewer people are expected to be out of work than previously thought.”

The Chancellor said the figures proved the Government’s response to the coronavirus crisis “is working,” but “while our prospects are stronger, coronavirus has done and is doing profound damage”.

He admitted “repairing long term damage will take time” but vowed “we will recover”.

Mr Sunak told the Commons: “Since March, over 700,000 people have lost their jobs. Our economy has shrunk by 10% – the largest fall in over 300 years.

“Our borrowing is the highest it has been outside of wartime.

“It’s going to take this country – and the whole world – a long time to recover from this extraordinary economic situation. But we will recover.”

ROARING ’20S

Shops and outdoor settings including pubs and cafes are set to reopen in April, followed by all indoor venues in May.

And according to the PM’s roadmap, Britain is set to be free from most Covid restrictions by June 21 at the earliest.

Experts predict the bounce-back could see an economic recovery similar to that of the Roaring ’20s, when an explosion of spending followed the devastation of the First World War.

Dr Nicholas Christakis, a social epidemiologist at Yale University, said last year the world is headed for an unprecedented recovery after a year of misery.

And Resolution Foundation chief Torsten Bell said the build-up of savings in the pandemic echoed the 1920s, with the end of Spanish flu and the First World War leading to Great Gatsby-style parties.

Mr Bell said: “People were desperate to get out and have a good time. It’s called the Roaring Twenties for a reason.”

A senior minister added at the time: “By the time the vaccine is rolled out, is going to be one big, long party.”

The Treasury’s plan to get Britain back on its feet will come in three parts and brings fiscal support to over £407billion.

Rishi Sunak said the plan includes continuing to do “whatever it takes to support the British people and businesses,” “fixing the public finances” and “building our future economy”.