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Public unaware of 'horrible' economic damage waiting 'around the corner', former chancellor warns

2020欧洲杯网站Lord Lamont says he fears some sectors of economy 'will disappear' after lockdown measures are lifted

Lord Lamont (centre) fears some sectors of the economy will disappear after the lockdown is lifted
Lord Lamont (centre) fears some sectors of the economy will disappear after the lockdown is liftedCredit: Joe Newman

The public are unaware of the "horrible" economic damage that is "coming around the corner" due to the coronavirus outbreak, a former chancellor has said, warning that the Government's furlough scheme has lulled workers into a "false sense of security."

Amid growing expectations that some companies may not reopen before Christmas, Lord Lamont said on Tuesday that he feared some sectors of the economy "will disappear" after the lockdown has been lifted. 

Lord Lamont, who served as Chancellor to John Major between 1990 and 1993, added that people currently reliant on the job retention scheme "may not realise their jobs have disappeared or about to... or that their firm is in serious trouble". 

His comments come after the current Chancellor, Rishi Sunak, acknowledged on Monday that the furlough scheme, which is covering 6.3 million workers at a cost of £8 billion, is not a "sustainable situation" in the long-term.

When the existing scheme ends in June, the Treasury is widely expected to introduce more flexibility in the system, including part-time furloughing, in order to gradually withdraw state support as businesses return to work. 

2020欧洲杯网站Ahead of changes to the scheme, the Adam Smith Institute called for Mr Sunak to introduce a partial furlough that will enable employees to return on flexible rotas, such as four days on, 10 days off, until they transition back to full-time.

However, in a stark warning Lord Lamont said he believed that the scheme was merely delaying the inevitable for thousands of workers whose firms may have suffered irreparable harm due to the virus pandemic

In a podcast interview with Higginson Strategy, the 77-year-old added: "I think part of the consequence of the furloughing scheme, for example, is to lull people into a false sense of security.

"I don't think they really see what is around the corner. And I think what is around the corner is pretty horrible. The furlough scheme is very expensive, and I don't think it can go on for very long.

"Some sectors will bounce back, but not necessarily back to where they were before. But some sectors will disappear. If you think of part of the services sector, hospitality, tourism, restaurants, hotels, airline travel – I think they're going to be very badly hit for a long time."

His comments were echoed by John Longworth, the former director general of the British Chambers of Commerce, who claimed that the current "unsustainable" levels of borrowing and spending risks "no juice being left in the tank to fuel" a post-lockdown stimulus package.

2020欧洲杯网站Meanwhile, research produced by the Resolution Foundation suggests the coronavirus crisis could see youth unemployment surge by 600,000. 

To help alleviate the impact on 18 to 24-year-olds, the thinktank has called on ministers to introduce additional maintenance support to help students stay in education longer, as well as providing employment guarantees for those entering the jobs market.

2020欧洲杯网站Turning to the next phase of the crisis, Lord Lamont called on the Government to ignore spiralling public debt and continue borrowing to help stimulate an economic recovery. 

His comments echo those of Boris Johnson, who last week insisted a return to austerity was not part of his Government's fiscal outlook

"I think, as we recover, the Government should be very careful to nurture that gradual improvement in the situation and shouldn't do anything in terms of reducing the debt that would hold back the recovery," Lord Lamont said.

Instead, he suggested tax increases could be introduced gradually to help reduce the deficit, citing his response to the economic downturn in the early 1990s. 

2020欧洲杯网站He added: "The recovery was just beginning and I announced a series of tax increases in order to reduce the deficit in borrowing, but I said they wouldn't be implemented for one, two or three years to let the recovery take place on a more elongated timetable.

2020欧洲杯网站"I think something similar will be required when we come out of this situation."