UK and EU officials are trying to adopt new trading conditions after Brexit came into force in January, but progress has been painfully slowed down and time is running out to prevent a break when transition regulations expire at the end of 2020.
British companies have already borrowed £ 35 billion ($ 44.4 billion) in government coronavirus aid programs, according to figures released by the British Treasury on Tuesday. And about 9 million people – about 27% of the workforce – rely on the state to pay all or part of their salary at £ 19.6 billion ($ 22.2 billion) so far.
According to the Organization for Economic Cooperation and Development, unemployment could rise to 15% in the fourth quarter if there is a second coronavirus outbreak.
The Paris-based agency said on Wednesday that the UK economy expects to shrink by 11.5% this year, even if a basic free trade agreement with the European Union is reached and a second wave of infections is avoided.
This is the worst projected contraction among the major economies. If infections rise again and stricter social removal measures are reintroduced, GDP may collapse by 14%.
Cabinet ministers are now lobbying for the UK’s two-meter social distance rule to be reduced to one meter, according to the World Health Organization’s guidance, according to a government source on controversy. This will be very important for the reopening of bars, restaurants and theaters and for the public transport to work.
According to the World Travel and Tourism Council, it is responsible for about 4 million UK jobs or 11% of the workforce and 9% of UK GDP in 2019. He estimated that 1.2 million of these jobs could be lost in 2020 due to the epidemic.
Brexit deadline machines
Considering that an uncontested Brexit will cause an economy on its knees, there may be no other option than to extend the duration of the UK trade talks. It’s by the end of this month to make such a request. Prime Minister Boris Johnson said he didn’t want to do this all the time.
British Brexit chief negotiator David Frost said in a statement that “progress was limited”, but insisted that the talks were “in a positive direction”.
“If we have a political time scale that takes us to a brinkmanship deal that will bring disaster for the British business in December, they won’t be ready,” according to Fairbairn.
CBI submitted proposals for a “business-rich economic recovery” in a letter to Johnson on Thursday. The group called on the government to prioritize skills development for young people, invest in the green economy and directly encourage those who focus on small businesses and high growth sectors.
OECD expects unemployment to reach 7.2% in the UK by the end of 2021, even if a second wave of infections is avoided and a trade agreement with the European Union comes into force. This is compared to 3.9% at the end of the first quarter of this year.
Charles Riley, Julia Horowitz, Luke McGee, Chris Liakos and Sebastian Shukla contributed to this report.