Boris Johnson has been told the Government must “unlock” businesses to allow the economy to recover from the coronavirus pandemic. Economist Gerard Lyons insisted the Prime Minister must work on a “pro-growth economic strategy” as he forecast it would take “until the end of next year” for normality to resume. Speaking to BBC Newsnight, Dr Lyons said: “We need to unlock, and we need to unlock in a way that the economy comes back to life.
“The economy has fallen very sharply, the likelihood is that the economy will start to grow as we move into the second half of this year.
“But it’s not going to be until the end of next year that we’re back to the pre-crisis levels.”
The British economist insisted the Government will need to provide support to those businesses greatly affected by social distancing requirements but urged the Treasury to stir away from austere policies.
Dr Lyons continued: “What we need is a pro-growth economic strategy, we need to continue to provide support to those businesses, those sectors whose business model is affected by social distancing.
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“At the same time, we need to stop the furloughing as the Chancellor has outlined.
“There’s no doubt the economy needs to have continued financial assistance in term of monetary policy, fiscal policy, I would argue tax cuts if necessary.
“It’s very important to stress, in an environment of low inflation, low-interest rates and low yields, there is no need for the Government to engage in austerity or tax increases.”
The warning has come as the Office of National Statistics announced the UK economy had shrunk by 20.4 percent in the month of April.
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Jeremy Thomson Cook, Chief Economist at Equals said: “It’s not a surprise that record declines in economic activity occurred when most UK businesses had people working from home or on furlough.
“The 20 percent fall is a shocking figure nonetheless, but gives us a good idea of how deep the trough is that the UK economy needs to make its way out of in the coming quarters”
“UK GDP has fallen down the lift shaft and will now have to take the stairs – a much slower and more labour intensive process – back up to recover.”
“With a Brexit showdown in the coming fortnight, we can but hope that today’s numbers focus a few minds in to providing an extension to the current transition period so as to relieve businesses from fighting two of their largest-ever battles concurrently.”