Kate Andrews

The number of people claiming unemployment benefits in Britain rose by over 856,000 to 2.1 million in April, the first full month of the lockdown. Figures from the Office for National Statistics reveal that the number claiming benefits due to unemployment has increased by nearly 70 per cent. This marks an unbelievable u-turn from the start of the year, when UK employment figures were hovering at record highs. These figures do not include ‘the furlough effect’: those who are still counted as employed, paid by the Government to stay home and wait for the green light to return to work.

The R-number has been declared the most important metric in monitoring Covid in Britain. For young children to return to school in June, or for pubs to open in July, it is always linked to the rate of Covid transmissions - the R-number - staying below one. Above one is the danger zone: it means each infected person is infecting, on average, more than one other. So plans to liberalise are put on hold and we possibly enter a more severe lockdown once again. When explaining his strategy last weekend, the Prime Minister even showed a picture of an R-Number speedometer. But it gave no reading. We're instead told a range: is that it hovers somewhere between 0.7 and 1. But we have never been told exactly what the R-number is.

Just how bad will the Covid economic hit be? Today’s figures for the first quarter of 2020 show Britain's economy shrunk by two per cent, but that takes into account just a few days of lockdown (and suggests that the recession started some time before). The March figure is more like it: despite only formally being in lockdown for eight days in March, the UK economy contracted 5.8 per cent that month alone. As Capital Economics puts it ‘in just one month the economy has tumbled by as much as it did in the year and a half after the global financial crisis.’ Yet some responses to today's figures reveal a worrying degree of optimism about the future.

Just weeks ago, Chancellor Rishi Sunak claimed that widespread use of the furloughing scheme was proof of its success. But it appears the government has over-achieved. The Treasury’s original prediction was that 10 per cent of businesses would use the salary safety net; the figure has turned out to be closer to 70 per cent. The cost for just one month of the scheme is estimated to be £8 billion, only £3 billion less than the NHS’s monthly budget. ‘We’re not talking about a cliff-edge but we have to get people back to work.’ says Matt Hancock, the health secretary. ‘We’ve got to wean off it.’ After telling ITV early this week that the scheme was ‘unsustainable’ for the long-haul, Sunak is changing tack.

What is the true cost of Covid-19? No one knows – yet. But it’s not going to be cheap. The Treasury has revised its borrowing plans for May to July up to £180 billion, four times what it planned to raise and over £20 billion more than it planned to borrow all year. So how are we going to pay for all this spending? Policies at the heart of the government’s Covid-19 response, like the furlough scheme, are surpassing all estimations for uptake, and have been granted a limitless price tag by the Chancellor through to the end of June at least.

Last week’s report from the Office for Budget Responsibility made waves with its latest economic scenario, estimating a 35 per cent collapse in GDP in the second quarter of the year. But could even that dire prediction have been too optimistic? While the downturn was estimated by the OBR to be sharp, so too was the economy bounce-back, creating a V-shaped recovery and quick economic improvement. But internal Treasury assessments revealed by the Times today predict a U-shape recovery: a longer, more painful return to the status quo. In both scenarios, the millions made unemployed by the Covid-19 lockdown take longer to return to work than the economy does to technically recover.