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UK economy could shrink by a THIRD and TWO MILLION could lose jobs if coronavirus lockdown lasts three months, government watchdog warns - as ministers fear terrified public will not leave their homes and return to normal life even if they ease curbs

UK economy could shrink by a THIRD and TWO MILLION could lose jobs if coronavirus lockdown lasts three months, government watchdog warns - as ministers fear terrified public will not leave their homes and return to normal life even if they ease curbs
  • Fears mounting over economic coronavirus fallout amid Cabinet splits over when and how to end lockdown   
  • Foreign Secretary Dominic Raab announced at yesterday's No10 press conference lockdown will continue
  • He said there were 'positive signs' in the battle against coronavirus but warned the UK is not yet at the peak 
  • Restrictions are due to last until at least May 7 and could go on even longer despite rising concerns about hit
  • Polling shows public strongly in favour of curbs with ministers fearing they would not obey orders to lift them 
  • England declared 667 more COVID-19 deaths plus 50 across Scotland, Wales and Northern Ireland on Monday
The economy faces shrinking by more than a third this quarter with two million people made jobless as coronavirus wreaks havoc, the government's watchdog warned today.
Shocking analysis from the Office for Budget Responsibility underlines the trade-offs being made to combat the deadly disease by putting the country into lockdown. 
It warns curbs staying in place for three months will slash GDP by 35 per cent, with unemployment soaring to 10 per cent and the government's deficit hitting £273billion - the highest level since the Second World War. 
The watchdog ominously said it was assumed 'for now' there will not be any fundamental economic damage, and much of the crash will be unwound as pent-up demand is unleashed. However, the resulting 13 per cent drop year-on-year is still worse than anything in the last century. 
Responding to the chilling scenario - which emerged as the IMF predicted the worst global downturn since the Great Depression in 1929 - Chancellor Rishi Sunak said: 'People should know there is hardship ahead.' 
The apocalyptic figures emerged after Dominic Raab moved to quash the idea of an imminent loosening, with the UK now facing restrictions until at least May 7.
But there is growing alarm about the potential death toll from economic misery, with life expectancy set to take a major hit. Doctors have also warned that suspending all non-urgent NHS operations to focus on coronavirus cases means more cancer and heart disease patients will die.
The Cabinet is divided between 'hawks' and 'doves' over whether to push to ease the lockdown soon, with some saying the public is obeying social distancing too well and must be urged to keep working where possible.
But concerns have been raised that it is impossible to lift the curbs at the moment anyway because the public is so strongly in favour of them staying in place, and would simply refuse to go back to normal. 
To underline the sense of drift the full Cabinet meeting was cancelled today for the second week running, as Boris Johnson recuperates from the disease at Chequers.  
In other developments on another chaotic day of crisis:
  • The IMF has said it expects the global economy to shrink 3 per cent this year - far worse than its 0.1 per cent dip after the credit crunch, but growth should rebound to 5.8 per cent in 2021. The UK is forecast to take a 6.5 per cent hit this year, while Italy could see a drop of 9.1 per cent; 
  • A total of 406 deaths involving Covid-19 in England and Wales registered up to April 3 occurred outside of hospitals, according to provisional figures from the Office for National Statistics; 
  • Nicola Sturgeon has vented anger at reports PPE has been diverted from Scottish care homes to English ones, saying she 'will not stand by and be treated unfairly'; 
  • Teachers are 'disturbed' by 'unhelpful' speculation that schools and colleges will reopen soon amid the Covid-19 pandemic, according to the largest education union in Europe; 
  • No10 chief adviser Dominic Cummings has returned to work in Downing Street after going into self-isolation when Mr Johnson tested positive for coronavirus; 
  • Boris Johnson is not taking any phone calls or receiving official papers as he recuperates from coronavirus at Chequers, Downing Street said; 
  • Government advisers criticised the 'all or nothing' approach to lockdown and said there is no evidence that sunbathing presents a transmission risk;
  • It was revealed the UK has missed three chances to participate in an EU scheme to buy huge quantities of personal protective equipment (PPE);
  • Europe took its first tentative steps towards a return to normality as some countries re-opened businessesThe OBR revealed grim estimates for what could happen to the economy if lockdown goes on for three months, and is then partially lifted for another three months. An eye-watering 35 per cent crash in GDP during the second quarter would be partially offset by a rebound in the rest of the year due to pent-up demand and government bailouts (left). Meanwhile, the spike in unemployment would take much longer to unwind (right)
The OBR revealed grim estimates for what could happen to the economy if lockdown goes on for three months, and is then partially lifted for another three months. An eye-watering 35 per cent crash in GDP during the second quarter would be partially offset by a rebound in the rest of the year due to pent-up demand and government bailouts (left). Meanwhile, the spike in unemployment would take much longer to unwind (right) 
The estimated 35 per cent GDP reduction in the second quarter this year is offset by rises in the rest of the year as pent-up demand is unleashed, but the resulting 13 per cent annual dip (shown in red on the chart above) would still be worse than the First World War or Great Depression
The estimated 35 per cent GDP reduction in the second quarter this year is offset by rises in the rest of the year as pent-up demand is unleashed, but the resulting 13 per cent annual dip (shown in red on the chart above) would still be worse than the First World War or Great Depression
Foreign Secretary Dominic Raab was in Whitehall today as he oversees the government's response with  Boris Johnson still recovering at Chequers
Foreign Secretary Dominic Raab was in Whitehall today as he oversees the government's response with  Boris Johnson still recovering at Chequers
The OBR backed the government's extraordinary bailout measures, including covering 80 per cent of the wages of staff who are 'furloughed' by companies, up to a ceiling of £2,500 a month.  
Despite the massive bill it says the 'measures should help limit the long-term damage to the economy and public finances – the costs of inaction would certainly have been higher'.
The watchdog stressed it is for ministers to decide how long the lockdown should last.
But it set out estimates for the impact based on a three-month lockdown, followed by another three-month period when they are partially lifted. 
'Real GDP falls 35 per cent in the second quarter, but bounces back quickly,' the report said. 
'Unemployment rises by more than 2million to 10 per cent in the second quarter, but then declines more slowly than GDP recovers. 

Majority of Britons back lockdown or say it should be even tighter

The vast majority of Britons back the lockdown rules being used to tackle the coronavirus but have mounting fears it will cripple the economy, a poll has found.
The country supports Boris Johnson's decision to shut down the country on March 23, but are scared about what it may cost.
It is understood Foreign Secretary Dominic Raab will announce on Thursday the restrictions will last until at least May 7.
The devastating virus has ripped across Britain, having killed 11,329 and infected 88,621.
As much as 19 per cent of mainly younger workers have been rendered unemployed or have been forced to take a salary cut

As much as 19 per cent of mainly younger workers have been rendered unemployed or have been forced to take a salary cut
The YouGov poll for the Telegraph found 84 per cent of those surveyed expected financial problems due to the lockdown.
As much as 19 per cent of mainly younger workers have been rendered unemployed or have been forced to take a lower salary.
The survey, which asked more than 2,000 Britons on Sunday, found 48 per cent of the country backs the Government's lockdown measures.
A staggering 92 per cent said they agreed with: 'I will probably follow the advice of the Government even if I don't agree with it or find it pointless.'
Yet 44 per cent feel the PM could have implemented tighter controls as daily updates of people flouting the rules continue to emerge. Meanwhile a higher figure have said they feel progressively lonely and unhappy as the mental health impact of the restrictions start to bite.
YouGov political research manager Chris Curtis said the findings prove tricky for the policymakers, with it showing people back the lockdown but fear for the economy if it continues.
Meanwhile a higher figure have said they feel lonely

Meanwhile a higher figure have said they feel lonely

'Policy measures support households and companies' finances through the shock.
'Public sector net borrowing increases by £218 billion in 2020-21 relative to our March budget forecast (to reach £273 billion or 14 per cent of GDP), before falling back close to forecast in the medium term. 
'That would be the largest single-year deficit since the Second World War.' 
The OBR calculations assume that most of the 35 per cent drop will be offset by a bounce back in the rest of the year. But it added: 'The resulting 13 per cent fall in annual GDP in 2020 would comfortably exceed any of the annual falls around the end of each world war or in the financial crisis '
Responding to the OBR figures, Mr Sunak said it was 'clear this will have a very significant impact on our economy' adding it is 'important that we're honest about that'.
'People should know that there's hardship ahead. We won't be able to protect every job or every business as I've said,' Mr Sunak warned. 
'It's clear we must defeat this virus as quickly as possible. That's not a choice between health and economics, that defies common sense. What we need is just to follow the rules and I'm grateful to everyone for doing that over the Easter weekend.'  
Tory former chancellor George Osborne described the economic numbers as 'shocking', warning that the 'effects of this virus will be with us long after' any cure.
He told BBC Radio 4's World At One programme: 'I don't think there's any trade-off at the moment because a sick society is not going to produce a healthy economy and the decision to quarantine the country, which is a decision that almost every other country in the world has taken, is also protecting the economy, but of course these figures today just show what the overall economic damage of this outbreak and the measures required to deal with it is having.
'And it's interesting, they're not particularly surprising numbers in the sense that they've been out there in the market and other economists have made these predictions, but they're still shocking numbers.
'This staggering loss of economic output, the staggering increase in the national debt and of course the real tragedy here is a massive increase in unemployment, not all of which comes back.
'In other words, many people don't simply get their job back later this year under this scenario and it's just a reminder that the effects of this virus will be with us long after hopefully we've found a cure.'
Highlighting the global nature of the crisis, the IMF said the world economy in 2020 will suffer its worst year since the Great Depression of the 1930s.
The fund said it expects the global economy to shrink 3 per cent - far worse than its 0.1 per cent dip in the Great Recession year of 2009 - before rebounding in 2021 with 5.8 per cent growth. It acknowledged that prospects for a rebound next year are clouded by uncertainty.
The bleak assessment represents a breathtaking downgrade by the IMF. In its previous forecast in January, before Covid-19 emerged as a grave threat to public health and economic growth worldwide, the international lending organisation had forecast moderate global growth of 3.3 per cent this year. 
'The world has been put in a great lockdown,' the IMF's chief economist, Gita Gopinath, told reporters. 'This is a crisis like no other.'
The 'best case' scenario would see $9trillion wiped off global GDP over this year and next - greater than the size of Germany and Japan combined. 
Earlier, Work and Pensions Secretary Therese Coffey said 'people will need to wait' to find out when lockdown measures will be lifted.
She told BBC Radio 4's Today programme: 'I'm conscious that people would like to know sooner but it would be irresponsible of the Government to just issue messages now without having been through that assessment and the recommendations and careful consideration of it.
'So people will have to just wait a little bit longer and more will be said at the end of this week.'
It came as new statistics revealed Britain's official coronavirus death toll is missing 10 per cent of victims because they died in care homes and not NHS hospitals.
Data collected by the Office for National Statistics showed there were around 4,100 COVID-19-related deaths registered by April 3 in England and Wales.
Slightly less than 10 per cent (406) of those deaths occurred in hospices, care homes and private homes, according to the analysis. 
But the daily death tolls published by the NHS and the Department of Health only count people who have died in hospitals.
Number 10 is now under mounting pressure to start recording all coronavirus deaths, wherever they happen, amid accusations doctors are sweeping the true death toll under the carpet. 
Shadow social care minister Liz Kendall said: 'We urgently need these figures on a daily basis to help deal with the emerging crisis in social care and ensure everything possible is being done to protect more than 400,000 elderly and disabled people who live in nursing and residential care homes.'
The Government was also forced to defend its supply of personal protective equipment (PPE) this morning after reports claimed it missed three chances to participate in an EU scheme to buy huge quantities.
The EU has ordered €1.5billion (£1.3billion) worth of protective masks, gowns and gloves for doctors and nurses – but Britain did not take part in talks about the purchases. 
The Government has previously said it was unable to join the EU's procurement schemes as it had not received an email of invitation.
Ms Coffey insisted this morning the UK 'is in a better place now than necessarily we would have been under the EU scheme'.
She said: 'The important point is that we have over 700 million pieces of PPE that are being delivered.' 
The government is still preparing estimates for how many 'excess' deaths will be caused by a deep recession - which could strip a third from GDP. 
But think-tanks have suggested that more than a million more people could end up with long-term health conditions.  
Treasury sources warned of 'systemic failures' if the economy is not revived by mid-summer. 'There's a point where there just isn't anything to come back to,' one source told the Times. 
But a Cabinet source told the Telegraph: 'We won't be able to lift the lockdown until the public feels ready for it. 
'The Prime Minister's illness has probably added another week to when that point will come, because it's made everyone feel as if they know someone who has come close to losing their life to the virus and it has changed attitudes. 
'We have to take the public with us, by unwinding the social distancing measures rather than stopping them suddenly, and it's up to us to make the case for it.' 
A YouGov poll found 84 per cent of those surveyed expected financial problems due to the lockdown.
As much as 19 per cent of mainly younger workers have been rendered unemployed or have been forced to take a lower salary.
But the survey found 48 per cent of the country backs the Government's lockdown measures.
A staggering 92 per cent agreed with the statement: 'I will probably follow the advice of the Government even if I don't agree with it or find it pointless.'
Some 44 per cent felt the PM could have implemented tighter controls as daily updates of people flouting the rules continue to emerge. 
The government's Scientific Advisory Group on Epidemics (SAGE) is meeting later to consider the latest evidence and try to thrash out a consensus, although it will not make a recommendation until later in the week. 
Mr Raab tried to voice cautious optimism last night as he revealed the latest data suggested the UK was 'starting to win this struggle', three weeks after restrictions were imposed.
But he insisted the virus was not yet past its peak and that it was 'far too early' to talk about relaxing the measures, with reports suggesting the lockdown will be extended for at least another three weeks.
Speaking at the Downing Street press briefing, he praised the public for staying at home over the Easter weekend, and added: 'Our plan is working.
'Please stick with it, and we'll get through this crisis together.'
Details of how the lockdown will eventually be lifted remain unclear, however, with the Government repeatedly refusing to outline its 'exit strategy'.
Scientists advising the Government are expected to meet this week to review the latest figures, but Mr Raab insisted it was crucial that 'we do not take our eye off the ball' with regards to social distancing.
It came as the World Health Organisation said restrictions should be lifted slowly and not 'all at once' to avoid a resurgence of the virus, and only if appropriate measures are in place, including 'significant' capacity for contact tracing.

Teachers 'disturbed' by claims schools could reopen soon 

Teachers are 'disturbed' by 'unhelpful' speculation that schools and colleges will reopen soon amid the Covid-19 pandemic, according to the largest education union in Europe.
The National Education Union (NEU) has written to the Prime Minister asking for the Government to urgently share its modelling, evidence and plans for reopening schools.
An early return to school will result in an 'increased risk' to school staff and children and it could 'undermine people's resolve to stick to social isolation', the NEU warns.
It comes after headteachers have suggested that schools should reopen for a period before the summer holidays, rather than September, if scientific evidence says it is safe to do so.
Schools in England closed more than three weeks ago to the majority of pupils, apart from the children of key workers and vulnerable pupils, due to the coronavirus outbreak.
There is no indication yet as to when they may be able to reopen but the NEU is concerned that speculation about schools reopening soon is allegedly being 'stimulated by unnamed Government ministers'.
The union is calling on Boris Johnson to consider the increased number of cases and mortalities among children, parents and teachers if schools were to be reopened.
But experts have also warned that the public's strong support to stick to the lockdown measures 'won't last' and the Government needs to find a way to tell the nation about how it will be eased.
Professor Linda Bauld, of the University of Edinburgh, said the public was now steeling itself for a continuation of the lockdown, amid an atmosphere where support for the measures remains high, compliance is generally good and concern about the virus is at the forefront of people's minds.
'But this won't last,' she warned.
'The social, economic and health effects of lockdown are accumulating.
'There will come a tipping point when the cost of the current restrictions outweighs the benefits.'  
She added: 'Sooner rather than later, government needs to share the possible options with the public and be transparent about the costs and benefits of each, rather than continually evading questions on this, as is currently the case.' 
Professor Robert Dingwall, who sits on the New and Emerging Respiratory Virus Threats Advisory Group which advises Sage, suggested the government had already gone over the top, and there was no evidence sunbathers posed a risk to one another.
'If it was entirely down to me I would be calling the dogs off. I don't think it is appropriate to harass sunbathers,' he told the Telegraph.
The Government has also faced criticism over whether more lives could have been saved if the lockdown had been implemented earlier, as the Department for Health said 11,329 people had died in hospitals in the UK as of 5pm on Sunday, with many more expected in care homes.




The OBR totted up estimates across sectors of the economy - suggesting the property market, retail and manufacturing will be among the worst hit
Dominic Cummings (left) was back in Downing Street today after working from home in self-isolation after Mr Johnson tested positive for coronavirus

But Mr Raab rejected any 'like-for-like' comparison with other countries, saying it depended on each nation's individual circumstances and how far along the coronavirus outbreak curve they were.
Meanwhile, questions were also raised about whether the number of coronavirus-related deaths in care homes was being properly recorded.
Industry bosses warned daily death tolls are 'airbrushing out' hundreds of older people who have died in the care system, as the chief medical officer announced that coronavirus outbreaks had been recorded at 92 care homes in the UK in just 24 hours.
Speaking at the daily press briefing, Professor Chris Whitty said around 13.5% of care homes in the UK have registered an outbreak, and said he would like Covid-19 testing to be increased in care homes.
The Government also continues to face pressure over shortages of personal protective equipment (PPE) for frontline NHS staff, as a growing number of health workers died.
According to The Guardian, the UK missed three chances to be part of an EU scheme to bulk buy personal protective equipment (PPE) for health workers, with European medical staff set to receive the first of £1.3billion-worth of PPE within days or a maximum of two weeks under the scheme.

Europe edges out of lockdown: Spain, Italy and Austria take the first tentative steps to lifting coronavirus restrictions (but France won't reopen for at least a MONTH) 
Europe took its first tentative steps towards a return to normality yesterday as some countries re-opened businesses. 
And several other nations have announced they are preparing to ease their lockdown restrictions in the coming days. Spain and Italy – the two European countries worst-hit by the coronavirus outbreak – have re-started some industries while Germany is considering opening schools from Monday. 
Millions of Spanish workers returned to their jobs on Monday after Madrid lifted the curbs on non-essential industries. Builders, cleaners, construction, factory and shipyard employees were allowed back to work, as police handed out millions of masks on the country's metro, train and bus networks. 
Non-essential industries were shut down two weeks ago as the virus peaked and deaths hit more than 900 a day.
But the relaxation came as it recorded its lowest number of new infections – 3,477 – for more than three weeks, with its daily death toll down to 517. Spanish prime minister Pedro Sanchez said social distancing and the ban on nonessential travel will remain, but that there could be a 'progressive and very cautious' relaxation of measures 'in two weeks'. Europe took its first tentative steps towards a return to normality on Monday as some countries re-opened businesses. Pictured: Policemen wearing protective masks walk at the city market in Lienz, Austria
Policemen hand in masks to commuters at the train station in Alcala de Henares, Madrid. The Spanish capital has now lifted the curbs on non-essential industries
This graphic shows the various restrictions in place in six European countries. Sweden is the only country which still has pubs and restaurants open, allows public gatherings of any size and keeps primary schools open as usual. The UK has no special border restrictions, but several countries are only allowing residents to enter. Spain is not allowing exercise as an excuse to go out. Italy does allow a walk near the home, but not cycling
Spain and Italy account for nearly a third of the global toll. But today, Italy also begins a phased return to normality after its rise in new infections fell to just 2 per cent. Its death toll topped 20,000 after 566 died on Monday – down from a peak of 919 just over two weeks ago. 
The country will consider relaxing further measures after nonessential shops, such as book stores and children's clothes shops, reopen today. 
Social distancing measures, bans on non-essential travel and the closure of non-essential industries will remain in place.
Last night, French president Emmanuel Macron announced that the country's lockdown would last until at least May 11.

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