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Nearly 800,000 home-owners are ‘vulnerable to repossession’

Nearly 800,000 households across the UK could be at risk of home repossession if they suffer a loss of income, according to analysis by a think-tank.

The Social Market Foundation said that of the 770,000 it calculates may be at risk of repossession, a quarter (26%) work in retail or manufacturing, sectors badly hit by the pandemic.

SMF research funded by the Building Societies Association (BSA) suggests more than one in 10 owner-occupiers do not have enough savings to cover a single month’s mortgage payment.

A ban on home repossessions has been put in place as part of coronavirus support measures and borrowers have also been able to take mortgage payment holidays.

Opinium polling of 2,000 mortgage-holders commissioned for the SMF found 29% had seen their household savings decrease during the pandemic.

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Close to 800,000 home-owners could be at risk of losing their home during these turbulent economic times

Scott Corfe, Social Market Foundation

Nearly half (46%) of mortgage-holders on incomes up to £20,000 said they have seen their savings decline.

The SMF suggested that a time-limited hardship grant could protect households from building up additional financial burdens.

Research director Scott Corfe said: “Close to 800,000 home-owners could be at risk of losing their home during these turbulent economic times.”

Paul Broadhead, head of mortgages and housing at the BSA, said: “With the growth in wealth and income inequality as a result of the Covid-19 pandemic, it’s now more important than ever to look at all possible options that could help home-owners who are struggling to meet their mortgage payments beyond lender forbearance.

“There isn’t one single solution that will support all those in need. Stakeholders, including Government and lenders, need to work together to ensure that home-owners and families, whether they’re dealing with temporary or longer lasting financial difficulties, have the best chance of overcoming their difficulties and enjoy a home which is financially sustainable.

“I hope that the findings in this independent report will stimulate debate and that a range of flexible and compassionate options can be found to create positive futures for those whose prospects may currently feel pretty bleak.”

The SMF analysed the Wealth and Assets Survey as part of its research.

By Vicky Shaw

Source: Belfast Telegraph

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UK economy to face ‘enormous strains’ following lockdown

Rishi Sunak is expected to include a host of actions to kickstart the UK economy in Wednesday’s Budget.

Chancellor Rishi Sunak has warned that Britain’s public finances will face “enormous strains” in the wake of the latest national lockdown.

Ahead of Wednesday’s Budget announcement, Mr Sunak told the Financial Times a bill for the government’s £280bn investment in coronavirus support will eventually have to be paid, with low interest rates leaving the nation’s finances “exposed”

Mr Sunak said: “We now have far more debt than we used to and because interest rates… at least a month or two ago were exceptionally low, that means we remain exposed to changes in those rates.

“That’s why I talk about levelling with people about the public finances [challenges] and our plans to address them.”

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While Mr Sunak did not reveal any details on specific tax measures, the Budget is expected to include a swathe of actions aimed at kickstarting the UK economy as lockdown eases over the coming months.

These include a £126m boost for traineeships and a mortgage guarantee scheme aimed at helping aspiring homeowners with small deposits on to the property ladder.

He plans to incentivise lenders to provide mortgages to first-time buyers, and current homeowners, with just 5% deposits to buy properties worth up to £600,000.

Mr Sunak added that while there is a challenge facing the nation’s economy, he believes the Budget will be a much-needed boon for those hit hardest by the pandemic.

He said: “I stood up at the beginning of this [coronavirus] thing and said I will do whatever it takes to protect the British people through this crisis and I remain committed to that.

“We went big, we went early, but there is more to come and there will be more to come in the Budget. But there is a challenge [in the public finances] and I want to level with people about the challenge.

“Some 750,000 people have lost their jobs and I want to make sure we provide those people with hope and opportunity. Next week’s Budget will do that.”

Source: Sky News

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Furlough numbers climb sharply in January to 4.7 million

Furlough numbers rose by 700,000 in January after tighter lockdown restrictions were imposed.

Treasury figures show a total of 4.7 million people were on the government scheme at the end of the month.

The hospitality sector, one of the hardest hit by the coronavirus crisis, furloughed 1.15 million people in January – an increase of 3%.

But the middle of February a total of £53.8bn had been claimed since the furlough scheme began last year.

The furlough data means that 16% of eligible workers were on the support scheme at the end of January.

In total, 11.2 million employees across the UK have been given furlough cash. The scheme pays up to 80% of salaries to those who cannot work because of Covid-19 restrictions.

Charlie McCurdy, researcher at the Resolution Foundation, said: “Furlough has once again played a crucial role in protecting incomes and keeping a lid on rising unemployment.

“But with almost five million workers still on furlough in the most recent data, our biggest labour market challenges may be ahead of, rather than behind, us.”

Separately, businesses took out a further £2.2bn of government-backed loans in the last month, according to Treasury figures.

The coronavirus business interruption loan scheme (CBILS) was most popular, with a further £1.2bn of loans awarded.

In total, nearly £73bn has been lent under the scheme and its two sister schemes – the coronavirus large business interruption loan scheme and the bounce back loan scheme.

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Gender split

The furlough figures show that while 1.5 million workers using the scheme are employed by big companies, it is staff at small firms with between two and four employees who are most likely to be furloughed.

These companies filed claims for more than 620,000 staff, or 36% of those eligible to be furloughed. Among larger businesses with more than 250 employees, only 9% of eligible staff were furloughed – the lowest proportion.

On average, women are more likely than men to be furloughed, however in London and Northern Ireland the furlough rate among eligible male employees is higher than among women.

Who is being furloughed?

The furlough statistics are vital to assess what is happening with the economy, and for how much longer the government’s rescue support will be required.

The answers from today’s statistics show that just under five million workers were on furlough in January during the second wave national lockdown.

It is though less than the nine million during the first national lockdown, giving some clues as to how the economy has been able to adapt better to these conditions.

By sector, retail and hospitality saw the biggest rises on the end of last year. About 68% of workers in the restaurant sector are currently furloughed. Retail furloughs were 938,500 at end of January, well up on December, but about half the level of the peak last April.

On the other hand, manufacturing and construction seems to have largely continued, and numbers furloughed are well down on the first wave.

The Centre for Cities dug into the numbers by location. The top 10 areas for furlough include those most exposed to tourism and aviation – Crawley, Blackpool, Brighton, Slough, all seeing over 1-in-6 workers on furlough. Those least reliant on the scheme include Barnsley, Doncaster and Hull at around 1-in-9 workers.

More women than men have been furloughed, reflecting the sectors most hit by pandemic lockdowns. By age group it is 25-34-year olds most hit, with over one million again now furloughed.

All of this underpins why rescue support will be extended at the Budget next week. But it also suggests that the real problems are concentrated by sector and by age.

Source: BBC

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Unemployment in the UK rises as COVID lockdowns hit economy

The United Kingdom’s unemployment rate edged up to 5.1 percent in the final three months of last year, its highest level in nearly five years, official data shows, as severe COVID-19 lockdown restrictions pressured the economy.

Figures published by the UK’s Office for National Statistics (ONS) on Tuesday showed that the jobless rate rose 0.4 percentage points between the beginning of October and the end of December 2020.

The rise came against the backdrop of regional and national restrictions put in place to curb the spread of the coronavirus pandemic, which has struck the UK hard, killing more than 120,000 people and triggering its biggest fiscal slump in more than 300 years.

Despite a historic government-backed job-retention scheme rolled out in response to the COVID-19 crisis, overall, unemployment had climbed 1.3 percent higher by the end of last year compared with December 2019, the ONS figures showed.

The number of payroll employees tumbled by 726,000 between February 2020 and January 2021, it said.

PM sets out a plan to ease lockdown

The grim ONS figures come as the UK’s finance minister, Rishi Sunak, is reportedly readying to spend billions of pounds in extra support for the economy over the next four months, in line with Prime Minister Boris Johnson’s plan to gradually ease England’s lockdown by late June.

Sunak delivers an annual budget on March 3, when he intends to set out the future of government assistance programmes including the furlough scheme and a 20-pound ($28) weekly supplement to the main unemployment benefit.

Announcing his so-called “roadmap” for easing restrictions on Monday, Johnson said his government would not abandon people and businesses in need of ongoing help from the state.

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Non-essential retailers will not reopen before April 12, at the earliest, under Johnson’s four-step strategy, while some businesses will remain closed until at least June 21.

“People may be concerned about what these changes mean for the various support packages for livelihoods, for people and for the economy,” Johnson told Parliament.

“We will not pull the rug out. For the duration of the pandemic, the government will continue to do whatever it takes to protect jobs and livelihoods across the UK.”

‘Every job lost is a tragedy’

Johnson’s remarks put pressure on Sunak to extend the state-supported 70-billion-pound ($98bn) furlough programme, which is due to expire on April 30, well before most social-distancing restrictions will be lifted.

Under current lockdown rules, people are encouraged to work from home where possible, while hotels and restaurants are closed to the public.

“At the budget next week I will set out the next stage of our Plan for Jobs, and the support we’ll provide through the remainder of the pandemic and our recovery,” Sunak said in a statement.

“I know how incredibly tough the past year has been for everyone and every job lost is a personal tragedy.”

So far, Sunak has spent more than 280 billion pounds ($395bn) on COVID-19 measures, including healthcare, support payments and tax breaks, and government borrowing in the financial year just ending will be the highest as a share of the economy since World War II.

He was keen to rein back the job-support scheme and unemployment benefit last year before a surge in infections in the autumn forced the government to extend support and belatedly tighten lockdown rules.

The government said in a statement that Sunak would set out more details on his longer-term fiscal plans during next week’s annual budget announcement.

“It is not sustainable to borrow at this current level over the medium term,” the document stated. “This means the government has a responsibility, once the economy recovers, to return to a sustainable fiscal position.”

Source: Al Jazeera

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Why second-charge loans could be the answer for persistent debt borrowers

Second-charge loans – After a difficult 12 months, prospects for the second-charge market in 2021 look encouraging.

We have seen significant levels of enquiries from advisers and their clients, while lenders have also responded by revamping their product lines and criteria.

It is undoubtedly the case that the core uses for second-charge loans, such as for home renovations or consolidating debt, have not disappeared with the pandemic.

If anything, they have become even bigger drivers for borrowers.

One additional area where second-charge loans could prove particularly useful, but which may not be on the radar for mortgage advisers, is for clients classed as being in ‘persistent debt’.

What is persistent debt?

Last year, the FCA introduced a new definition for borrowers in what it termed as ‘persistent debt’.

This was classed as borrowers who have been charged more in interest and fees on their credit card and have paid just the minimum payment for the preceding 18 months.

There’s no shortage of ‘persistent debt’ borrowers either. A study by the FCA last year suggested there are as many as three million credit card customers who are in persistent debt, who have paid an average of around £2.50 in interest for every £1 repaid.

Given the difficulties of the last year, let’s be clear – the number of persistent debt borrowers is only likely to have increased.

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The role of second-charge loans

So, what’s that got to do with second charge mortgages?

Well, credit card providers are required to write to borrowers in this position and put together a plan with them to start actually clearing that outstanding debt.

If they can’t, then spending on the card may be frozen.

Now, for some borrowers this won’t be a huge problem. They may have the disposable income to increase the amount they are paying each mont, or even simply pay off their balance each month, and carry on as usual.

But let’s be clear, the pandemic means there are far fewer borrowers in a position to just absorb those larger payments without it causing further issues.

As a result, these borrowers face having their cards frozen unless they can come up with the funds to get out of this persistent debt classification.

One customer of ours with credit card debts of c.£30,000 had their minimum payments increased with little notice from £435 a month to just under £1,000.

Their credit card company wanted them to pay twice the interest accrued that month as a means to drive down their balance.

Unable to take such a drop in disposable income and while in the middle of a fixed rate period on their first-charge mortgage, their financial adviser successfully identified a second-charge mortgage as the solution and introduced them to us.

With a significant monthly saving, as well as an overall saving over the term of the loan, the client is far happier and has vowed never to use their cards again.

With a second charge mortgage, homeowners can tap into the equity they have already built up in their property, releasing money to clear that outstanding credit card debt and maintain the card as a spending option, without having to touch their existing mortgage.

It’s a smart way to sidestep any potential early repayment charges or the risk of having to move to a higher interest rate on their first-charge mortgage.

What’s more, the speed of arranging a second-charge loan is now extraordinary.

We’ve had cases go from initial enquiry to completion in less than a week, an unbelievable turnaround that – chances are – isn’t going to be possible through the usual remortgage routes.

These speeds have a tangible benefit too.

By delivering that funding so quickly, it means the client can clear that balance and remove the risk of their cards being frozen within a matter of days, rather than suffering through the uncertainty and stress of it dragging on for weeks, or even months.

Going the extra mile

We know only too well that mortgage advisers across the country pride themselves on delivering a holistic service, on helping their clients with financial issues and queries beyond a simple purchase mortgage.

And that’s why it’s so important for advisers to speak to their clients about their credit card position, about whether they fall into the persistent debt category and have a way out of it.

The FCA’s approach to persistent debt borrowers provides the advice profession with an excellent opportunity to reopen those lines of communication with your existing client bank, and to steer them away from the risk of having their spending options reduced.

Clients remember those advisers who go the extra mile; it’s a way to secure their business for life, not just for their next home purchase.

By Barney Drake

Source: Mortgage Introducer

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UK Redundancies Are Rising Faster Now Than In 2008

New figures have found that UK redundancies are rising at a faster rate as a result of the coronavirus pandemic than they did during the 2008-2009 financial crash.

Stark new analysis from the Office for National Statistics (ONS) has found the rate of job losses linked to the pandemic has already exceeded the highest rate seen during the financial crash with those working in the admin and support services industry hit the hardest.

The ONS’s quarterly analysis of the labour market up to December 2020 found the UK’s redundancy rate was has risen consistently since the beginning of the pandemic and is currently sitting at a record peak of 14.2 per thousand employees, compared to a maximum of 12.2 per thousand during the previous financial downturn.

But the ONS warned the economic impacts of the pandemic, which are higher than during 2008-2009, would continue “manifesting themselves in the economy”.

“Policy measures introduced to contain the spread of the virus, such as public health restrictions and voluntary social distancing, have had pronounced impacts on the UK economy,” they said.

“Major shocks to the economy, such as the coronavirus pandemic in 2020 and the recession between 2008 and 2009 have different causes and policy responses, but they have a common consequence: they cause the economy to contract and unemployment and redundancies to increase.”

Meanwhile, the stats watchdog found a major rise in the number of companies who expected large redundancies of 20 or more employees, rising from 485 in March 2020 to 1,734 in September.

The ONS analysis found the highest rates of redundancy had been recorded in the administrative and support services industry with 35.8 per thousand employees, followed by those in the “other” category, which includes arts, entertainment and recreation, which had rates of 30.5 per thousand.

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They also found that job losses were markedly higher among disabled people, with 21.1 per thousand being made redundant between July to November 2020, compared to 13.0 per thousand among non-disabled workers.

It comes after a recent report from The Resolution Foundation found that almost two million people have not been able to work for six months during the pandemic, including 700,000 who had been unemployed for at least six months.

The grim job figures come ahead of Rishi Sunak’s planned Budget on 3 March where he is expected to announce fresh measures to shore up the economy.

But business chiefs have already called for a further extension of the furlough scheme beyond the proposed April end date and more financial support to avert further job cuts.

Speaking on Thursday, Adam Marshall, director general of the British Chambers of Commerce, said the Chancellor would be making a “huge mistake” if he chose to “pull the plug” on the support schemes too early.

And he warned that removing the support would be “akin to writing off the billions that have already been spent helping firms survive and preserving jobs”.

He told the BBC’s Today programme: “I liken this to a marathon. Businesses have been running it and they are in the 25th mile right now, they can see the finish line ahead.

“You want them to get over the finish line and then you want to get them an energy drink and a blanket to help them start to recover.

“That is why extending the scheme is so important. You don’t want them falling within sight of the finish line.”

By John Johnston

Source: Politics Home

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UK Economy Risks Jobless Recovery From Covid Crisis – BoE

The UK economy risks a jobless recovery from the coronavirus, with surging gross domestic product and lingering unemployment, a policy maker at the Bank of England said.

Michael Saunders, a member of the central bank’s Monetary Policy Committee, said the pandemic has gone on longer than anticipated and is hurting the finances of businesses and households.

“Strong quarterly growth rates that leave GDP well below its pre-Covid level and unemployment relatively high are not a boom,” Saunders said in a video conference in London on Thursday. “As time goes on, corporate balance sheets especially among small firms are steadily getting worse. The longer the crisis goes on, the greater the risk of long-term scarring effects that will weigh on demand subsequently.”

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The remarks indicate divisions at the central bank about the strength of the recovery and confirm some of the concerns raised by the Resolution Foundation, which hosted the event. Bank of England Chief Economist Andy Haldane expects a sharp recovery in the second half of the year that will absorb workers out of a job because of the crisis. That contrasts with rising alarm about the damage a third national lockdown is doing to huge parts of the economy.

The Resolution Foundation warned that 2.6 million people in the U.K., or 8% of workers, expect to lose their jobs in the next three months. Its analysis found about 2 million people had been unemployed or on furlough for the past six months, a length of time that leaves them at higher risk.

A separate report from the British Chambers of Commerce found a quarter of the 1,100 businesses polled planning job cuts if government support programs end as planned. Saunders said it’s possible to see a benign outlook for the UK economy, where demand recovers quickly.

“There is a less benign one in which rising unemployment itself weighs on spending because fears of job losses make people anxious — keen to ensure their own household budget will be OK — and firms fearing weak demand also don’t hire as much,” Saunders said.

Prime Minister Boris Johnson hopes a rapid vaccination program will allow shops, restaurants and bars to reopen by the summer, returning most of those unemployed to work.

“While the U.K.’s economic prospects are finally looking up, job insecurity remains high, particularly among those who have spent long periods not working, or who are currently furloughed,” said Nye Cominetti, senior economist at the Resolution Foundation.

Those comments help feed a debate about how aggressively Chancellor of Exchequer Rishi Sunak should support workers through the pandemic in his budget statement on March 3. The central bank is forecasting unemployment will rise from 5% currently to 7.8% by the third quarter, leaving the total number of jobless at around 2.7 million.

Resolution called on the Treasury to extend furlough beyond the end of Covid restrictions. Earlier this week, the Institute for Fiscal Studies also recommended Sunak taper back the program, which is current due to expire in April, giving companies an incentive to adjust to the new economic reality.

“In setting policy, our key focus is to try to give businesses and households confidence that demand will recover strongly,” Saunders said. “That’s the best way to ensure that if unemployment does go up as the furlough scheme comes to an end, then the rise is short-lived and we get back to full employment as quickly as possible.”

By Lucy Meakin

Source: Bloomberg

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Furlough warning as redundancies among over-50s increase 240%

The number of redundancies among over 50-year-olds increased by 240% last year, new figures suggest.

The total rose from 35,000 at the start of 2020 to 121,000 by the end of the year, according to an analysis by Rest Less, which offers advice to older 50s.

Redundancy rates for the over 50s have climbed from 4.2 per 1,000 employees in January to March 2020 to 14.4 in September to November, said the report.

The study added that 25-34-year-olds have been hardest hit by redundancies so far.

Stuart Lewis, founder of Rest Less, said: “With businesses suffering in the wake of the pandemic, we knew redundancies were going to be high as furlough was originally scheduled to end last October.

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“Even though redundancy rates amongst the over 50s have never been this high, our concern is that there is worse still to come with more than 640,000 over 55s still on furlough.

“The biggest challenge for the over 50s is not redundancy or furlough rates, but rather it’s what happens when talented workers in this age group move from paid employment to job seeking status.

“The recruitment process is where age discrimination bites hardest, particularly at this time when the pandemic has exacerbated existing inequalities in the workplace.”

A Government spokesman said: “Older workers are a vital asset to this country and hugely employable, which is why our Plan for Jobs is delivering tailored support to help them back into work and retrain into new industries.

“We are increasing the number of frontline work coaches by 13,500, offering bespoke support to ensure people find a job that’s right for them, helping over 50s retrain on our sector-based Work Academy Programme, and our new £2.9bn restart scheme will see people across the UK who have been out of work for at least 12 months get back on the job hunt.”

By Neil Shaw

Source: Wales Online

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London Boroughs Have Highest Rate Of Landlord Possession Claims

London boroughs accounted for eight in 10 local authorities with the highest rates of landlord possession claims, data from the Ministry of Justice shows.

Newham had the highest rate of possession claims, 118 per 100,000 households, followed by Brent (115 per 100,000) and Ealing (106 per 100,000).

After London the South East was the area with the most possession claims, as it seems there’s a correlation between more expensive areas to rent and the number of claims.

Franz Doerr, chief executive at rental tech platform flatfair, said: “Although landlords have been hamstrung by the eviction ban, today’s figures indicate that many are still actively taking steps towards evicting tenants when they are able to do so.

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“A high proportion of private tenants working in London’s locked-down service sector — combined with the high cost of renting — has triggered a perfect storm that has seen private rent prices plunge in recent months.

“Ultimately, traditional landlords have been left to go it alone throughout the pandemic, while facing stiff competition from an increasingly strong, institutionally-backed build to rent sector. Unlike in Scotland and Wales, England still hasn’t introduced a tenant loan scheme. Such a move would allow renters to continue paying their rent by providing ultra-low-interest loans that are paid directly to landlords.”

He added: “Landlords are quickly becoming fed up with the lack of support coming their way, which could eventually give way to an exodus from the buy-to-let sector. This would be disastrous for renters, too, by depleting the number of more affordable rental properties on the market.

“Now, mountains of debt are piling up at the feet of landlords who are currently powerless to act. Although the overall number of possession claims has decreased by 67 percent, this figure likely masks a high number of landlords who are planning to evict struggling tenants but are yet to take formal action.

“The government must now go beyond simply extending the evictions ban deadline if it wants to avoid permanent damage to Britain’s rental market.”

BY RYAN BEMBRIDGE

Source: Property Wire

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UK GDP 2020 – not quite as bad as it looks like

It says something about the world we’re in that a 9.9% contraction in the UK economy in 2020 is seen as good news by economists. But with the economy expanding by a healthy 1.0% in the fourth quarter of last year, despite November’s lockdown, GDP ended up shrinking slightly less in 2020 than had been feared.

Still, the big story is that the UK economy last year suffered its biggest annual contraction in over 300 years, far worse than anything seen in the Great Depression. A 9.9% decline in GDP is also the largest of any sizeable economy other than Spain. Why has the UK economy been so hard hit by the global pandemic?

Most obviously high levels of infections in the UK have resulted in more severe and sustained restrictions on movement than most other major countries. That has generated a corresponding decline in mobility and economic activity. The UK has had more confirmed COVID-19 deaths as a share of its population than any country other than Slovenia, Belgium and San Marino. Differing national recording practices make such comparisons tricky – that is why excess deaths, the death rate relative to a seasonal norm, are seen as giving a more reliable picture. UK excess deaths during the pandemic exceed every industrialised nation bar Belgium, but are lower than in several middle-income countries including South Africa, Russia and Mexico.

The severity of the pandemic and the UK lockdown explain some but not all of the shortfall in UK GDP. Differences in the composition of GDP, and the way in which public sector output is measured, have also played a part.

As a consumption-heavy economy the UK has been especially badly hit by lockdowns. Consumer spending accounts for 64% of UK GDP, higher than any rich economy other than the US, and far higher than the 53% average for the euro area. Moreover, an unusually high proportion of UK consumer spending, 21%, more than in any G7 nation, goes on so-called socially consumed services such as meals out, leisure activities and holidays. Lockdowns have put paid to such spending, reinforcing the UK downturn.

I thought reduced spending on restaurants and so on might have been offset by increased spending on durables like coffee makers, swivel chairs, monitors, to name three I’ve bought. Yet the latest data, which cover the first nine months of 2020, show that UK consumers reduced spending on durable goods, even as consumers in other G7 countries increased their durable goods purchases.

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The final factor in the outsize decline in activity lies in the way in which UK government activity is measured. Gauging public sector output is difficult. How, for instance, can one begin to measure the ‘output’ of the army, the NHS and schools? Most countries get around this problem by using readily available proxies, such as levels of spending and the number of staff. In recent years UK statisticians developed improved measures using actual ‘outputs’, including the numbers of operations carried out and classroom teaching hours. During the pandemic, with hospitals postponing elective surgery and schools closed, this has resulted in sharp declines in the measured ‘output’ of health and education in the UK, even as public expenditure, and numbers employed, have surged. This better captures the experience of patients and pupils in the last year, but with other countries using input measures, it creates a misleadingly depressed picture of UK GDP relative to other rich countries.

There are two implications from all of this.

First, adjusting for differences in the measurement of public sector output UK GDP probably contracted at a similar rate to other, hard-hit European economies, such as France and Italy, last year. Britain has suffered an unprecedented downturn, albeit one that is not wholly out of line with major European peers.

Second, some of the factors that drove the downturn will, in reverse, help lift it. An easing of restrictions would enable consumers to start spending. Overall consumer wealth and savings have risen over the last year and there is a lot of money sitting on the sidelines. Last week the Bank of England’s chief economist Andy Haldane said that UK consumers had amassed some £250bn during the pandemic and the economy could bounce back like a “coiled spring” once restrictions are eased. The reopening of schools and a return to elective surgery should similarly turbo-charge public sector output this year.

Before we get there we have to navigate the current lockdown that we see depressing GDP by 4.1% in the first quarter. But from spring, and assuming restrictions are eased, we see a powerful recovery unfolding, with GDP rebounding by 3.9% in the second quarter and 5.4% in the third quarter.

However you measure it, 2020 was an awful year for UK growth. 2021 is likely to deliver an exceptional rebound.

By Ian Stewart

Source: Reaction

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