UK economic crash: Rishi Sunak faces bleak future as unavoidable job losses strike

The UK was forced to go into strict lockdown at the end of March in a bid to stop the spread of the deadly virus. Millions of people were unable to go to work due to the restrictions and fears of a catastrophic economic crash have been ignited.

Under government rules, non-essential shops are now allowed to reopen as long as they follow the two-metre social distancing rules.

But there are concerns about the future of the hospitality industry and those which require face to face contact.

Steven Swayne, the chairman of the Institute for Turnaround – an organisation which helps struggling businesses recover without going into administration – has provided a bleak future for certain sectors of the economy.

Speaking to the, Mr Swayne said: “Sectors that needed face to face contact will be the ones that suffer the most. Hospitality, retail, restaurants.

Rishi Sunak warned of bleak future for businesses

Rishi Sunak warned of bleak future for businesses (Image: Getty)

Businesses face closure due to COVID-19

Businesses face closure due to COVID-19 (Image: Getty)

“Insolvencies in 2019 were the highest they have been since 2013.

“A survey before COVID-19 found around 130,000 businesses were in distress.

“Some of those industries were hard hit and are obviously going to be when this all lifts.

“What I do know is you have got to start thinking about your business now as restrictions are easing.

READ MORE: Shoppers rush back to the high street as shops reopen after 3 months

Chancellor Rishi Sunak says furlough will end

Chancellor Rishi Sunak says furlough will end (Image: Getty)

“It is going to be a competitive industry.”

Although many businesses have been forced to close due to lockdown and many employees have been out of work, the government has provided a scheme to help struggling businesses.

Chancellor Rishi Sunak announced back in March the government will help pay 80 percent of wages to those who have been affected by the virus.

The furlough scheme has been praised by business owners and employers but Mr Sunak revealed the scheme will end in October despite fears of a second wave.

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What is furlough?

What is furlough? (Image: Express)

But Mr Swayne believes the scheme “needs to end” and predicted there are going to be job losses.

He said: “The government has enabled businesses to survive.

“Whether the government should extend the furlough scheme is a political one.

“There are going to be job losses, that judgment needs to be made.

High streets have been deserted since lockdown

High streets have been deserted since lockdown (Image: Getty)

“We’ve got a very generous scheme both in terms of furlough and bounce back loans, it is a political question about affordability.

“And it is not one that can be made yet.

“The government has to stop the furlough scheme at some stage.

“They can’t have 10 million people not on the payroll. It does need to end.”

Victoria's Secret has fallen into administration

Victoria’s Secret has fallen into administration (Image: Getty)

Peter Westaway, a chief economist at Vanguard, warned it could take “a matter of years rather than months” to get back to pre-crisis levels.

In a statement obtained by the, he said: “Despite that sanguine medium-term outlook, we should not assume that markets have no further surprises in store for us, so it’s impossible to rule out further downward lurches in prices along the way.”

Mr Westaway also warned there is a risk of relaxing lockdown measures too early and the “faltering economy” could be thrown into reverse.

Boris Johnson allowed shops to reopen from June 15

Boris Johnson allowed shops to reopen from June 15 (Image: Getty)

He continued: “There is a risk that the relaxation of lockdown measures might need to be reversed, and the faltering recovery in economic activity might be thrown back into reverse.

“And with COVID-19 still raging through many developing economies, and in the absence of restrictive cross-country travel restrictions, there is a possibility of a second wave affecting developed market economies more broadly.

“This could be the trigger that undermines market sentiment and sends prices falling again.”

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