Rishi Sunak was always honest with the public about the “significant” economic effects lockdown would have on the British economy – and by all indications the first signs of trouble are here. Data from the Office for National Statistics shows that the number of people claiming out of work benefits rose to 2.8 million in May. The year-on-year rise in the claimant count was the largest in almost 100 years.

Furthermore, the number of payroll employees was over 600,000 lower in May than in March, though it is worth noting that the unemployment rate remained unchanged in the three months to April – a testament to the success of Sunak’s Job Retention Scheme. The Government had, of course, hoped to avoid mass redundancies via furloughing – which has supported 8.9 million employees and cost nearly £20 billion – but confidence and market factors appear to have taken their toll. 

To add to the chaos, there has been a record drop in the number of self-employed people and falls in the number of weekly hours worked. From March to May, the UK had the largest quarterly decrease in job vacancies since 2001 – when records began. According to research from ManpowerGroup, hiring intentions for the third quarter of 2020 fell to -12 per cent, the weakest level since records began in 1992. 

By all indications, conditions are being set for a tumultuous period ahead, with the worst economic damage expected to come later in the year when the Government ends its furloughing scheme. This process will come in stages – with employers expected to partially contribute in the final months, and henceforth experts have predicted that we will see three waves of unemployment. The worst stage could potentially come in combination with a second winter bout of Covid-19, making Christmas one of the most miserable in recent memory.

Clearly the effects of Covid-19 are different for each industry, with practical jobs being the worst impacted. UK Hospitality, for instance, has said that 30,000 to 40,000 companies could start redundancy processes next week – leading to the loss of millions of jobs – and has urged for more information on re-openings and re-consideration of the controversial two-metre rule. 

Retail jobs reduced by 53 per cent between January and May, when compared with 2019’s figures. At the same time, jobs in the health sector, as well as social and civil services, accounted for one third of jobs posted on recruitment sites in May.

These disparities will no doubt exacerbate social inequalities that have already been exposed throughout the Coronavirus crisis, as those in office jobs – who can Zoom into meetings – will be more able to survive the Covid-19 conditions than blue-collar workers.

The impact will also be generational; research from the Resolution Foundation has shown that more than one in three 18 to 24-year-olds is earning less than they did before the outbreak. Around a quarter of them has been furloughed, as a result of so many being represented in bar/ leisure centre/ restaurant jobs.

The Government needs to take extremely seriously the problem of mass unemployment among the young, especially given the rise of protests in recent weeks. Having taken the brunt of 2008’s financial crisis, with little to no prospect of home ownership or having a family, millennials particularly have been in need of serious attention for years – as with even younger groups, more of whom will now not go to university now, as a result of Covid-19.

Many ideas have been put forward to bolster the economic recovery. It is ConservativeHome’s view that the Government needs more than just tax cuts and less red tape to fix this unprecedented situation. As Paul Goodman wrote in May; “we need a Reaganesque programme of tax cuts, regulatory reform and infrastructure spending to try to grow rather than cut ourselves out of the hole we are in.”

Though we wish the pandemic could have been avoided, it ultimately presents one of the few opportunities the Government has to radically reset its economic priorities. As Neil O’Brien wrote in his recent column, it could even be time to revisit “zombie assumptions from the 90s”, like the idea that industrial policy can’t work. Such investment would further the Government’s policy of “levelling up” the economy.

It is certainly the moment to think about what skills young people ought to be learning – as opposed to pointless sociology degrees in “discourse analysis” – as a means to regenerating our economy. One suspects the taxpayer would not mind paying for coding courses or technical training if it helps build up industries quickly.

Whatever the Government proposes, if these ONS statistics are just the beginning of the economic carnage, it had better act fast.