Unemployment could hit highs not seen since the 1980s, ex Chancellors warn


Brits must brace for unemployment levels to hit highs not seen in the UK since the 1980s, according to two former chancellors.

Alistair Darling, the last Labour politician to hold the top economic job was joined by his former rival and successor George Osborne in calling on ministers to ensure more structures to help the unemployed are in place.

Alistair Darling, who was Labour chancellor under Gordon Brown during the 2008 financial crisis, said: “We need to get ourselves into the frame of mind where we’re thinking of 1980s levels of unemployment.

“If it doesn’t happen, that’s great but I think we need to be ready for that and if we’re not people will ask why.”

Answering questions on comparisons between the financial crisis and the coronavirus pandemic from the Treasury Select Committee,Mr Osborne said: “We didn’t really have to deal with mass unemployment. We never faced the structural unemployment that we saw in the 1980s.”

Chancellor George Osborne and former Chancellor Alistair Darling
Ex-Chancellor George Osborne and former Chancellor Alistair Darling rarely appear together

He added that the Government must make sure unemployed workers do not end up on long-term benefits.

The former Tory chancellor explained: “Governments of all colours since the Second World War have not done terribly well at getting structurally unemployed people back into work.”

Mr Darling also warned that Britain’s economy will not recover until the Government has coronavirus under control.

He said: “Until the Government gets control of the virus it’s difficult to see how you can pull out the stocks and get the economy moving again.”

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He added that  Rishi Sunak should not choke off the first signs of any recovery by cutting back to harshly on any support.

Mr Osborne warned that people ended up “trapping” people on the furlough scheme if it remained overly generous for too long.

The pair were giving evidence alongside former Tory chancellor Philip Hammond, who said there were too many uncertainties to know how quickly and successfully the economy can recover.

He said: “A lot is going to depend whether over the next months it is clear that we are heading towards a vaccine or treatment for this disease and returning the economy to something like normal, or, by contrast, that we’re not heading towards an early vaccine or a treatment and we have to plan, in terms of restarting the economy living with Covid – restructuring our businesses so they can operate in a sub-optimal way so they can operate with the disease.”

All three said the Government should not concern itself with the high levels of debt the UK is wracking up in the short term, avoid tax rises and consider tax cuts either through a VAT reduction or national insurance payments.

Mr Hammond said there was “no economic logic to increasing taxes in the short term”.

The trio also discussed interventions, welcoming the furlough scheme but warning it would need to be extended in some form.

Experts worry that many of the 8.7 million people who have been placed on furlough might lose their jobs when the scheme starts winding down and is ended.

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The government currently promises to cover 80% of the salaries of furloughed workers.

It came as the governor of the Bank of England told Britain’s biggest banks to intensify preparations for a “no trade deal” Brexit amid growing signs of deadlock between London and Brussels.





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