UK chancellor of the exchequer Rishi Sunak. Picture: DANNY LAWSON/AFP
UK chancellor of the exchequer Rishi Sunak. Picture: DANNY LAWSON/AFP

London — The UK got new warnings of the lasting economic damage the coronavirus pandemic will inflict on the economy as chancellor of the exchequer Rishi Sunak is due to face MPs on Monday.

Sunak, who last week extended the UK’s much-heralded jobs retention plan, is expected to field questions in parliament amid growing speculation about how the nation will foot the bill for the dramatic increase in borrowing needed to fund his plans.

Data this week will shed more light on the scale of the economic damage done by the restrictions to control the coronavirus, as the nation releases reports on unemployment, inflation and retail sales. A private survey will give a real-time view of the extent of any partial rebound in May.

The chancellor said last week that data showing a record 5.8% economic contraction in March suggested the UK was probably in the middle of a significant recession, and there were more warnings of the scale of pain ahead at the weekend.

Bank of England chief economist Andy Haldane told the Telegraph the UK is heading towards an unemployment crisis comparable to the one experienced in the early 1980s, while the chair of the nation’s fiscal watchdog said output was probably about a third smaller than it usually is in April.

Robert Chote, who heads the office for budget responsibility, told the BBC that the April contraction was likely to be the nadir of the coming recession. The bigger question, he said, is how long the recovery would take and the scarring effects.

“The key worry is if you have not just a very sharp downturn in the economy but one that scars its future potential,” Chote said. “It’s a matter of psychology as much as the concrete restrictions as well.”

A period of austerity to help pay for the government’s financial response to the crisis isn’t “a done deal”, he said.

Getting Britain’s economy moving again has been a key priority of the government as it looks to encourage a sceptical electorate that they should return to offices and, particularly, send their children back to school next month. Earlier in May, it dropped the “stay at home” message for “stay alert” — a shift that left many Britons confused.

The new approach has also prompted concern over safety in a nation that has the highest death toll from the virus in Europe and helped prompt a shift in public sentiment against Prime Minister Boris Johnson’s overall strategy. An opinium poll published in the Observer newspaper showed more people now disapprove of the government’s handling than approve of it for the first time since it started tracking views on the pandemic in March.

In an opinion piece for The Mail on Sunday, Johnson acknowledged people’s frustration with the “complex” easing of England’s lockdown, but called on the “good sense of the British people” to act responsibly and allow the country to slowly return to normal life. The UK on Sunday announced a further 170 deaths from the virus, the lowest increase since March, while a report by Sun on Sunday said Johnson has told backbench Conservative MPs that he wants a return to near-normality in July.

Still, Johnson wrote in his op-ed that Britain may not be free of the coronavirus “for some time to come”, and said the way to control the outbreak was “through testing and tracing”.

In an interview with Sky News on Sunday, cabinet office minister Michael Gove said the government has recruited 17,000 contact tracers and will be ready to roll out its plan by end of May. The UK is “making progress” against the virus, and that the number of people being infected is falling day by day, he said.