'These are tough times and there'll be more to come': Rishi Sunak admits 'significant' economic impact of coronavirus

  • Video report by ITV News Business and Economics Editor Joel Hills

The coronavirus crisis is having a "significant" impact on the UK economy, the chancellor has admitted, after a new report claimed Covid-19 is causing the worst economic shock in 100 years.

Rishi Sunak conceded the government "can’t protect every business and every household" and warned "these are tough times and there will be more to come".

Acknowledging a report by the Office for Budget Responsibility, which said there could be a 35% hit to the economy between April and July, Mr Sunak said "those economic impacts are significant".

But he said the government is "not just going to stand by and let this happen", as he pointed to the OBR prediction that the economy should bounce back.

  • ITV News Business and Economics Editor Joel Hills explains the potential economic impact

"We came into this crisis with a fundamentally sound economy, powered by the hard work and ingenuity of the British people and British businesses.

“So while those economic impacts are significant, the OBR also expects them to be temporary, with a bounceback in growth.”

He said the government's response to the virus "aims to directly support people and businesses while restrictions are in place" so they can get "moving again" as soon as restrictions are lifted.

He said the OBR predicts the UK's economic situation "would be much worse" had protective measures not been taken.

"In other words, our plan is the right plan," he added.

But he admitted mistakes were likely to have been made during the high pressure situation.

“When you are faced with such an unprecedented challenge, are we going to be absolutely perfect in every single thing we do, at the pace we are having to do it? Of course not,” he said.

But they were doing “what we think is in the best interests of the country and people” and would be making improvements where necessary.

The main points from the OBR report:

  • National income - or GDP - falling by 35% in the second quarter of this year

  • Unemployment rising by 2 million to a rate of 10% (worse than in the banking crisis)

  • Public sector net borrowing to be £273bn or 14% of GDP this year (a multiple of its rise in the banking crisis)

  • Income tax revenues falling by £57 billion

  • VAT falling by £30 billion

  • All public sector receipts dropping by £130 billion

  • The Coronavirus job retention scheme (the furlough scheme) costing £42 billion

  • The self-employed income support scheme costing £10 billion

  • The small business grant scheme costing £15 billion

  • The business rates package costing £13 billion

  • All such government decisions collectively costing just under £100 billion

  • ITV News political editor Robert Peston analyses the economic situation

He also touched on the UK's latest coronavirus figures which showed 12,107 have died with coronavirus in UK hospitals, an increase of 778 from the day before.

Professor Stephen Powis, the national medical director of NHS England, pointed to a possible levelling in the number of new hospital admissions.

He said there was “increasing evidence now that the number of hospital admissions is stabilising and plateauing” in London and other areas.

But he warned the public not to become complacent.

He told the Downing Street press conference that lockdown compliance levels among the public are “very high”, but said: “We need to keep it that way.

“We absolutely need to make sure that we keep the benefits of this going forward and we don’t take a foot off the pedal, we don’t become complacent.”

He said testing figures suggested a “plateauing in the number of new cases” being picked up, though cautioned that not everyone who is symptomatic in the community is tested.

He added: “We are beginning to see the benefits of the undoubted hardship that we have all been asked to go through in terms of social distancing, in terms of not meeting with friends and family.

“It’s really important that those benefits are maintained, that we continue to follow the instructions that we have all been given and we will then get on top of this virus.”

Chancellor Sunak told the press conference: “Right now, the single most important thing we can do for the health of our economy is to protect the health of our people.”

Following reports of Cabinet rifts over the potential length of the lockdown and the economic damage that it will cause, Mr Sunak said: “It is not a case of choosing between the economy and public health.

“Common sense tells us that doing so would be self-defeating."

“At a time when we are seeing hundreds of people dying every day from this terrible disease, the absolute priority must be to focus all of our resources – not just of the state but of businesses and all of you at home as well – in a collective national effort to beat this virus.”

The chancellor also pointed to an extra £4.5 billion which he claimed had been given to public services in recent weeks.

He gave the press conference as Boris Johnson recovers from coronavirus at his countryside mansion, Chequers, with his fiancee Carrie Symonds.

The Prime Minister’s official spokesman said: “The priority is for the PM to rest and recover and his medical team have advised him not to immediately return to work.”