Coronavirus unemployment could take seven years to rebound, says think tank
Levels of unemployment could take seven years to be restored to pre-coronavirus levels, according to a leading UK think tank.
Torsten Bell, chief executive at The Resolution Foundation, said today there had been “way too much talk of a v-shaped [economic] recovery” and that based on historical precedents it will take almost a decade for employment to bounce back.
The Office for Budget Responsibility (OBR) has estimated that unemployment will reach nine per cent as a result of the crisis, which Bell told the Treasury Select Committee was “optimistic”.
The UK’s official unemployment rate is expected to rise substantially when new figures are released, after a 70 per cent increase in Universal Credit claims in April.
More job losses will likely follow when the government’s furlough scheme is lifted, with many companies using the programme tipped to not re-open.
“If unemployment hits 10 per cent, on historical standards it will take seven years to get back to employment before the crisis,” Bell said.
“Because we’ve all lived through record employment for the last five years, we’ve forgotten how slow general history shows unemployment bounce backs are.”
He added: “The sectors that have generally been the quickest to bring people back from unemployment are hospitality and retail.
“If you look at hospitality and retail after the financial crisis, they were 10 per cent of the jobs, but 22 per cent often move from unemployment to jobs after the crisis and they cannot do that this time in the same way.”
Boris Johnson has already warned of high levels of unemployment as a result of the crisis and has promised to offer apprenticeships for every young person who wants one.
There has also been speculation that Johnson wants to re-open the hospitality sector before the end of the month in order to save jobs.
The government’s Covid-19 lockdown roadmap said the sector would not be opened before 4 July.
Chancellor Rishi Sunak is also reportedly drawing up plans for a long-term jobs programme to retrain and reskill the labour force.