Top Tories pile pressure on Boris to end back-to-work confusion

BORIS JOHNSON is under mounting pressure from senior Conservatives to end confusion over official guidelines telling people to “work from home if you can”, amid growing fears of a collapse of city-centre economies.

Two senior members of the 1922 Committee, which represents Tory MPs, told the Evening Standard that the government advice is wrong and unless dropped could cause a “longer and deeper recession”. However, the Government appeared to be in confusion as Cabinet ministers contradicted each other over whether staff should stay at home or return to their offices.

Environment Secretary George Eustice said people should still work from home “when they can”, contradicting Cabinet Office Minister Michael Gove who said the exact opposite and Mr Johnson himself who on Friday urged people to “get back to work”.

Calls to get people back to offices and shops follow the Standard’s investigation revealing the scale of the economic crisis at the heart of

and a record-breaking 20.3 per cent crash in April, the only whole month of full lockdown.

Economists had been expecting the biggest monthly rise in GDP in May as the lockdown began to ease for the first time in the middle of the month.

The dominant services sector, which accounts for four fifths of the economy, inched forward just 0.9 per cent.

Last month the Bank of England said the UK economy was on course for a rapid “V-shaped” recovery.

Chancellor Rishi Sunak said: “Today’s figures underline the scale of the challenge we face. I know people are worried about the security of their jobs and incomes. That’s why I set out our Plan for Jobs last week, following the PM’s new deal for Britain, to protect, support and create jobs as we safely reopen our economy.”

The OBR report also sounded a bleak warning on the amount of borrowing by the Government, expecting debt to rise to £2.205 trillion in the current fiscal year, a sum equivalent to 104 per cent of Britain’s entire national earnings. Debt would then rise to £2.4 trillion next year, £2.5 trillion in 2022 to 23, and £2.6 trillion in 2023 to 24.

The OBR said that such huge levels of debt are not sustainable and would leave the country highly vulnerable to any rise in interest rates.

“In the short term, the Government understandably remains focused on controlling the virus and reviving the economy,” the report said. “But at some point ... it seems likely that there will be a need to raise tax revenues and/or reduce spending to put the public finances on a sustainable path.”

Thomas Pugh, of Capital Economics, said: “The 1.8 per cent rise in GDP suggests that hopes of a rapid rebound from lockdown are wide of the mark.”

INCREDIBLY, the UK recession hasn’t actually started yet — at least not by the old rules of economics, which say a formal recession only begins after two quarters of falling GDP. But the old rules have gone out of the window. The economy cratered when lockdown began: plunging like a stone chucked down a mineshaft. In April, GDP fell by 20.3 per cent. This morning we found out that it went up in May, as some activity began again — but only by 1.8 per cent. Under the old rules of economics growth like that in just a month would be something to celebrate — but again, not any more. It’s a lot less than the five or so per cent economists had been hoping for and it still leaves economic output massively smaller than it has been for years.

Our economy is now the size it was back in 2002. Every bit of growth since then has been wiped out.

So what happens next? There’s a lot of chatter about whether the recovery will be V-shaped — shooting back up — or flatlining as an L, or maybe an O which leaves a hollowed-out middle. Whatever the letters, the impact is massive and the pain will go on for years. GDP is sometimes accused of being a misleading way of measuring whether our lives are getting better or worse — drive a fuel-hungry, polluting car in central London and you help push GDP up, make the same trip on a quiet, clean bike and it doesn’t count in the figures but air quality and our health gain. But when the collapse is this big, everyone will be hit hard.

Is there hope? Maybe. The bits of the economy which came out of lockdown early have done best — construction sites began work again in May so that bit of the economy grew more sharply. So did manufacturing. Services and retail — a massive part of our prosperity — did less well in May. But in June and July, they will have expanded. If city centres start filling up again, and offices reopen, that trend could continue. Of course, the economy has to cope with the costs of new customs rules with the EU and the possibility of a hard Brexit with no deal this Christmas. Unemployment is about to shoot up. But May’s data may yet turn out to be the start of a recovery.

Our economy is now the size it was in 2002. All growth since has been wiped out