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Rishi Sunak Warns of Recession 'The Likes of Which We Have Never Seen' as UK GDP Contracts

© AP Photo / Matt DunhamRishi Sunak
Rishi Sunak - Sputnik International
As the United Kingdom plunges into a recession amid a national lockdown introduced to slow the spread of the coronavirus pandemic, some lawmakers are beginning to wonder if the impact on the economy is a worthwhile sacrifice to combat the deadly virus.

Chancellor Rishi Sunak on Tuesday warned that the UK economy may not immediately bounce back from the COVID-19 recession and that the impact of a maintained lockdown would be "severe".

Speaking to Parliament, Sunak told MPs that the UK should not rely on a "V-shaped" recovery which some predicted when the country first introduced lockdown measures in March.

He told the Lord’s Economic Affairs Committee that shutting down many sectors of the economy for months would leave "permanent scarring" on the economy.

"We are likely to face a severe recession the likes of which we have never seen", he said.

The Chancellor suggested that the most effective way to help business would be to let them reopen. Rebuking predictions of long-term damage by the Bank of England and the International Monetary Fund (IMF), Sunak described the crisis as "unprecedented" and explained that the longer the lockdown continues, the worse the economy will be impacted.

"It is critical, both for economic and social justice reasons, that we get those people back to work", he added.

​Sunak stated that young people would be the worst affected by job losses amid the pandemic, his assertions supported by a report published by the Resolution Foundation think tank on Tuesday.

Following the introduction of social isolation measures, London launched a furlough scheme with the aim of giving financial support to business to pay temporarily laid-off workers 80 percent of their normal salary.

The Office for National Statistics (ONS) figures released last week gave the first official look at the lockdown's economic impact, showing a contraction of 5.8 percent in gross domestic product (GDP) in March - the largest monthly drop on record.

​IMF figures also provide a grim forecast for the UK, predicting the worst recession since the US Wall Street Crash beginning in 1929 implemented the Great Depression, with a projected GDP retraction of -6.5 percent this year.

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