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Home / World / As Britain rises from an economic pit, tough questions are asked

As Britain rises from an economic pit, tough questions are asked

LONDON – To understand why Britain has entered the deepest recession of its modern history, go for a walk in central London, no longer a ghost town, but still a shadow of its once-immersed self.

Tangled grocery stores open the shopping mall on Oxford Street. Theaters in the West End are dark, desolate office towers. Underground, the tube is a grim parade of signs that warn passengers to wear face masks and keep their distance. With traffic at almost a quarter of last year’s levels, this is not difficult.

Only restaurants, created by a government incentive program that subsidizes dinner meals, are showing signs of life. But, like the widely acclaimed government program that guaranteed 80 percent of the wages of millions of workers, the “Eat Out To Help Out”

; promotion will soon cease, and the government faces tough choices if it will extend support.

Undoubtedly Britain has been low on the coronavirus, easily the strongest blow of any European nation, both in public health and in the economy.

“What we are dealing with is something that is unparalleled, and we do not have a player book on how to handle it,” Exchequer Chancellor Rishi Sunak told the BBC on Wednesday after the Office for National Statistics reported that the economy shrank by an unprecedented 20.4 percent in the second quarter.

This was the deepest quarterly decline of any major European country, and it sparked a fresh round of hands in Britain, which has also gained the unwanted difference to achieve the highest number of coronavirus deaths in Europe, with the most more than 51,000 deaths.

In part, Britain’s dire economic numbers reflect a question of time: Prime Minister Boris Johnson imposed a deadlock a week later than most of his European neighbors and lifted the restrictions later as well. This means that Britain suffered more damage in the second quarter than France, Italy or Germany, which began reopening during that period.

But Britain’s economy’s problems are also linked to its wider experience with the virus. Because its outbreak was so widespread, protracted and deadly, economists said, the fear of climbing continues to be higher in Britain than elsewhere. Despite the government’s encouragement, people should not resume normal life, especially in cities like London, where working from home is an alternative for many people.

Google, which uses cell phone signals to track foot traffic in offices, shops, restaurants and transit stations, says business activity in Britain has swept through Germany, France, Italy and Spain since mid-May, although the gap has begun. to narrow.

“If you have a massive explosion, people will respond with caution and it will take some time for the trust to return,” said John Springford, deputy director of the Center for European Reform, a research institute. “It makes sense that London will be among the hardest hit.”

For all its reopening speeches, Britain still has stricter borders than any major European country, according to Oxford University School of Government Blavatnik, which tracks the severity of government-imposed restrictions on schools. And workplace closures for travel bans.

It is even more closed than Spain, which has recently seen a spur of infections that prompted the British government to impose a 14-day quarantine on people who traveled there and returned to Britain.

Like Spain, Britain is particularly vulnerable to a sudden drop in consumption because its economy depends more on services, including tourism and hospitality, than those of Germany or France. Economists said it was no coincidence that Spain’s second-quarter contraction, at 18.5 percent, was closer to that of Britain. The German economy, with its broad industrial base, shrank by 10.1 percent while France fell by 13.8 percent.

None of this eases the pressure on Mr. Johnson’s government, which has been under tight control for its treatment of the pandemic. So far, its economic measures have isolated people from the sudden displacement of their livelihood.

But Mr Sunak insisted the government would stop wage subsidies in late October. He has so far resisted fierce pressure from the opposition and other critics to soften his stance.

“A downturn was inevitable after the stalemate, but Johnson’s jobs crisis was not,” said Anneliese Dodds, the shadow chancellor of the Labor Party, who said the government should continue to target targeted support for vulnerable workers.

Mr Sunak claims the government cannot guarantee wages indefinitely because some jobs will not be returned after the pandemic. Encouraging people to look for new jobs is essential to giving them a sustainable future.

However, a sharp rise in the unemployment rate will be difficult for Mr Johnson’s Conservative government to resist, especially since it was developed on a platform to bring prosperity to Britain ‘s industrial north. The battery of job losses is already running low: On Tuesday, troubled department store chain Debenhams announced 2,500 job cuts on top of a previously announced 4,000.

Critics said it was unreasonable for the government to force people to return to the job market when Britain’s testing, tracking and isolation system was not strong enough to give them confidence that they could move safely. This is especially true in parts of the country like Leicester and Greater Manchester that have suffered fresh outbreaks and are placed under local closure.

“The government has taken a one-size-fits-all approach to ending the job placement program,” said James Smith, director of research at the Resolution Foundation, a London-based research institute. “But the economic response should target the country where the economy is hardest hit.”

Mr Sunak has tried to do this with “Eat Out To Help Out”, a 500 500m ($ 654m) program to strengthen the besieged restaurant industry by subsidizing customer food up to 10 10 ($ 13) for person. As of Aug. 9, the government said people had purchased 10.5 million meals using the incentive.

At the German Gymnasium, a cave restaurant near Kings Cross Railway Station, the promotion drew a respectable crowd Tuesday night – comparable, said general manager Sam Bernard, for a weekend night. He said his only request would be for the government to extend it Thursday evening.

Like most restaurants, the German Gymnasium faces a bleak outlook. It depends on the business from Google and Facebook, which have offices nearby. But both companies have told their employees they can work from home until at least next summer. And the government subsidy ends on August 31st.

“We can not count on the support of the government forever,” said Mr. Bernard. “If it stops, we will have to take care of ourselves and think a little outside the box.”

Anna Joyce contributed reporting.

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