Photo taken on Feb. 28, 2020 shows the exterior of London Stock Exchange Group in London, Britain. British stocks decreased on Friday, with the benchmark FTSE 100 Index down by 3.18 percent, or 215.79 points, to close at 6,580.61 points. (Xinhua/Han Yan)
Photo taken on Feb. 28, 2020 shows the exterior of London Stock Exchange Group in London, Britain. British stocks decreased on Friday, with the benchmark FTSE 100 Index down by 3.18 percent, or 215.79 points, to close at 6,580.61 points. (Xinhua/Han Yan)

As Britain enters the fourth week of lockdown, the British government is caught between a rock and a hard place over whether to continue the lockdown or protect the economy by easing some restrictions.

On Wednesday, a Downing Street spokesman told reporters that the government will make an announcement on Thursday on its review of social distancing measures, noting that governmental advisers do not believe Britain has passed the peak of the novel coronavirus pandemic.

NO EXIT STRATEGY YET

Prime Minister Boris Johnson put the country in lockdown on March 23, banning non-essential travels and public gatherings to contain the spread of the virus. Malls, pubs, restaurants, cinemas, theaters and museums are all closed, with the public required to leave home only for shopping for necessities, exercise, health care or essential travel to work.

As Britain braces for its “darkest hour” in fighting the virus, number of confirmed cases has surged to 98,476 as of Wednesday morning, with the death toll of those hospitalized reaching 12,868 as of Tuesday afternoon.

“We’re still not past the peak of this virus,” said Foreign Secretary Dominic Raab, who deputizes for the prime minister while Johnson is recovering from COVID-19 after being discharged from hospital.

“The government doesn’t expect to make any changes to the measures currently in place at that point, and we won’t, until we’re confident as we realistically can be, that any such changes can be safely made,” Raab said.

However, pressure is mounting on government to set out how and when it plans to lift the lockdown restrictions.

Labour leader Keir Starmer has called on the government to reveal its strategy for exiting the coronavirus lockdown this week.

In a letter to Raab, Starmer said that although millions of Britons had stuck to the rules, they “need a sense of what comes next”.

“The question for Thursday therefore is no longer about whether the lockdown should be extended, but about what the government’s position is on how and when it can be eased in due course and on what criteria that decision will be taken,” said Starmer in the letter.

LOCKDOWN COST BUILDS UP

While the British government’s top priority is tackling coronavirus as a public health crisis, there are signs the coronavirus impact on the economy is so severe that the government cannot overlook.

The Office for Budget Responsibility said Tuesday that due to the impact of the outbreak, Britain’s gross domestic product (GDP) could fall 35 percent in the second quarter.

It forecast that the British unemployment could rise by more than 2 million to 10 percent in the second quarter.

In a report published last week, the Centre for Economics and Business Research said the current level of lockdown in Britain will lead to a reduction in economic output of 31 percent, dealing a severe blow to manufacturing, accommodation, non-food retail and construction sector.

The think tank studied the economic impact of the lockdown through 105 major industries of the economy. Some essential industries are still operating as usual, while some are constrained by remote working, employee sickness or self-isolation and some shut down entirely.

Air travel demand has collapsed as a result of unprecedented travel restrictions to tackle coronavirus. EasyJet has grounded its entire fleet of aircraft while British Airways stopped all flights to and from London’s Gatwick Airport, potentially suspending more than 30,000 staff.

“Initial forecasts show passenger demand in April is set to decrease by over 90 percent, with lasting and significant industry-wide effects predicted,” said the Heathrow Airport Tuesday.

DIRE FISCAL CONSEQUENCES

The Institute for Fiscal Studies (IFS) has cautioned though the COVID-19 pandemic is first and foremost a public health crisis, its fiscal consequences will continue to make themselves felt for years, and more likely decades, to come.

An IFS study found British government’s borrowing might exceed 175 billion pounds (about 218.6 billion U.S. dollars) in the coming financial year due to cost rising from substantial fiscal policies to tackle the impact of the pandemic.

“We might expect borrowing in the coming financial year to exceed 175 billion pounds, or more than 8 percent of national income. This would be more than triple the amount forecast in the budget just two weeks ago,” said Isabel Stockton, a research economist at the IFS.

Morgan Stanley forecast last month that the British economy will contract by 5 percent this year due to the impact of the pandemic, in sharp contrast to the most recent official growth forecasts of 1.1 percent from the Office for Budget Responsibility.

To address the economic consequences, the British government has launched schemes with more than 330 billion pounds (412.2 billion dollars) of loans and guarantees to help firms keep operating amid the pandemic. It has promised to cover 80 percent of wages — up to 2,500 pounds (3,122.6 dollars) a month — for employees who are unable to work during the pandemic.

After the Bank of England had cut interest rate to record low of 0.1 percent in two emergency moves in March, the Treasury and the bank agreed last Thursday to temporarily extend the use of the Ways and Means (W&M) facility, enabling the government to borrow from the bank to fund its fight against the pandemic.

The W&M facility, which functions as the government’s overdraft account with the bank, reached 19.9 billion pounds (22.8 billion dollars) at the height of the financial crisis in 2008. Enditem

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