Watch the full interview with Chancellor Rishi Sunak
On Thursday morning we learned that UK gross domestic product (GDP) grew by 1.1% in September, leaving the economy 9.7% smaller than it was at the beginning of the year.
The scale of the collapse in activity this year has been extraordinary. Despite a record-breaking bounce-back in the summer, the UK remains deep in recession.
England is in Covid lockdown, the economy is expected to shrink further in the run up to Christmas and if the government is unable to agree a trade deal with the EU in the coming weeks then it won’t be a very happy new year.
There are 49 days to go until the end of Brexit transition and, astonishingly, businesses still don’t know what the new trading rules will be.
The chancellor says negotiators are still “hard at work” but that a trade agreement may not be possible.
The Bank of England estimates that around one in three businesses in the UK aren’t ready for our imminent departure from the Single Market and the EU Customs Union on 31 December.
The Bank believes disruption at the border is inevitable, deal or no deal, and that economic growth will be damaged as a result. It calculates that there will be a hit to GDP of around 1% in the first six months of 2021, even if a trade deal is secured.
On Thursday morning the chancellor ruled out giving businesses more time to prepare themselves by extending the transition period.
“I think what people need is certainty and clarity - and it's because of those perennial extensions we had in the past that hampered preparedness,” Rishi Sunak told ITV News.
“I'm confident and comfortable that that work [to prepare businesses] has been going on for now many months and we will be in a good place.”
Companies complain about a lack of detail about customs checks, labelling requirements, changes to regulations and standards, as well as whether they will have to contend with tariffs and quotas.
They express concern about how the Northern Ireland Protocol will be implemented and what impact it will have on the people of Northern Ireland.
Tate & Lyle Sugars, which backed the Brexit campaign, recently told its customers in Northern Ireland that it will struggle to supply them from 1st January (LINK)
In the past week, Sainsbury’s has warned it may have to reduce the number of products it sells in Northern Ireland.
Marks and Spencer says it foresees problems getting food into the country and that prices may rise.“There are going to be changes in our trading procedures. And it's right that businesses get ready for those. And we're providing a lot of support to help them do that,” Rishi Sunak insistedI asked the chancellor to rule out the possibility of chaos when transition comes to end. He didn’t.
Rishi Sunak did defend the government’s handling of the coronavirus pandemic.
He denied it was a mistake to introduce a national lockdown in England, six weeks after government scientists advised one was necessary.
Rishi Sunak insists it was “entirely appropriate” to wait until 5th November to establish if local restrictions had worked.The chancellor didn’t say if he thought the economic damage will be greater or the death rate higher as a consequence of not have enforced a lockdown earlier.
Rishi Sunak also explained his decision to extend the furlough scheme, which he had insisted should end in October.
On 24 September, Sunak announced a Winter Economy Plan.
He said the furlough scheme needed to be phased out because it was keeping some people in jobs that weren’t viable.
Five weeks later he changed his mind and extended the scheme until December.
Five days later he extended it again until March.
The chancellor said the big change in strategy was “absolutely appropriate” given that the UK is “dealing with a health crisis, the likes of which we haven't havn’t seen before.”
He added that it was “hard to say” how many of the 2 million jobs which were furloughed when the scheme was extended would still be viable when this crisis ends.
Recessions hit the poorest in society hardest and this one is no different.
I asked the chancellor if he would commit to protecting those on low pay from tax rises and spending cuts when he begins the job of repairing the public finances.
He suggested (but didn’t say) that he would.
“I can't comment on future budgets,” Sunak said “but I think people can judge us on our track record thus far, which shows that those on the lowest incomes have seen the most support and protection.”
Video report by ITV News Business and Economics Editor Joel Hills