LONDON - Britain's economy will lose about £22 billion ($29 billion, 24 billion euros) this year on the coronavirus-induced collapse of global travel, which could imperil three million jobs, an industry body forecast Wednesday.
International visitor spending could plunge by 78 percent from 2019, equating to a loss of £60 million per day or £420 million a week, the World Travel & Tourism Council (WTTC) predicted in a key report.
"Travellers and tourists are staying away from the UK in droves because of continuing uncertainty around travel restrictions designed to curb the spread of COVID-19," the WTTC stated.
It continued: "The severe impact on UK travel and tourism is laid bare by WTTC as the economic fallout from coronavirus continues to burn its way through the sector.
"Nearly three million jobs in the UK supported by travel and tourism are at risk of being lost in a 'worst case' scenario mapped out by WTTC economic modeling."
The nation's economy shrank by one fifth in the second quarter, more than any European neighbour, as the lockdown plunged the country into its deepest recession on record.
Tourists remain reluctant to visit because Britain is the European country worst hit by the coronavirus.
YEARS TO RECOVER
Travel has also been discouraged after the UK government recently re-imposed quarantine on those returning from nations including Austria, Croatia, France, the Netherlands and Spain.
The WTTC added Wednesday that London has been hardest hit by the travel collapse because around 85 percent of tourist spending in the capital is from foreign visitors.
"The economic pain and suffering caused to millions of households across the UK, who are dependent upon Travel & Tourism for their livelihoods, is evident from the latest figures," added WTTC President Gloria Guevara in the report.
"The lack of international travel caused by the pandemic could wipe out more than £22 billion from the UK economy alone... from which it could take years to recover.
"It could also threaten London's position as one of the world's premier hubs for business and leisure travel which could see other destinations take over.
"We urgently need to replace stop-start quarantine measures with rapid, comprehensive and cost-effective test and trace programs at departure points across the country."
British tourism's lobbying body VisitBritain had forecast Tuesday that the number of foreign tourists will plummet by 73 percent in 2020 to 11 million people on the back of the pandemic, which has grounded aircraft worldwide.
Agence France-Presse
LONDON - British government debt has exceeded £2 trillion for the first time following massive state borrowing as the coronavirus pandemic pushed the UK economy into a record recession, official data showed Friday.
At the end of July, total accumulated debt hit £2.004 trillion ($2.61 trillion, 2.2 trillion euros), the Office for National Statistics (ONS) said in a statement.
That was equivalent to more than 100 percent of the country's annual gross domestic product, or total economic output, for the first time since 1961.
By comparison, Apple this week became the first US company to have a market valuation totaling $2 trillion (£1.5 trillion), boosted as it is seen as a key winner in the new post-coronavirus economy.
Compared with July 2019, UK debt increased by £227.6 billion, reflecting the huge increase in borrowing needed to tackle the pandemic.
'SIGNIFICANT STRAIN'
"This crisis has put the public finances under significant strain as we have seen a hit to our economy and taken action to support millions of jobs, businesses and livelihoods," finance minister Rishi Sunak said.
"Without that support things would have been far worse."
Net borrowing between April and the end of July is estimated to have hit £150.5 billion, the ONS said.
Last month's figure alone came in at £26.7 billion, as the UK emerged from a strict lockdown imposed at the end of March to curb the spread of the coronavirus.
"Today's figures are a stark reminder that we must return our public finances to a sustainable footing over time, which will require taking difficult decisions," said Sunak, whose official title is Chancellor of the Exchequer.
"It is also why we are taking action now to support the growth and jobs which pay for our public service, by helping businesses to reopen safely."
POUND PUMMEL
The pound fell by more than 1.0 percent against the dollar on Friday as the EU and Britain traded blame for the lack of progress after the latest round of post-Brexit trade talks, with Brussels warning that a deal looked unlikely.
Sterling was changing hands at $1.3074 in afternoon trade, compared with $1.3214 late Thursday.
The pound is being punished "by Brexit talks which seem to be going nowhere," said Neil Wilson, analyst at Markets.com.
"The two sides are still far from reaching agreement on key terms" of their post-Brexit relationship.
RETAIL RECOVERY
Separately, data showed that British retail sales jumped by 3.6 percent in July from June as shops, restaurants and pubs reopened.
"Retail sales have now regained all the ground lost during the height of the coronavirus restrictions as more stores open for trade and online sales remain at historically high levels," ONS statistician Jonathan Athow said.
"While still below their pre-pandemic levels, both fuel and clothing sales continued to recover.
"Meanwhile, food sales fell back from their recent peaks as people started to venture back into pubs and restaurants," Athow said.
Marks and Spencer, the British food and clothes retailer, announced this week that it was cutting 7,000 jobs as COVID-19 increasingly pushes customers to shop online.
The company joins the likes of UK department store chains Debenhams and John Lewis, as well as pharmacy group Boots, in cutting thousands of jobs owing to pandemic fallout.
Britain's economy shrank by one fifth in the second quarter, more than any European neighbor, as the lockdown plunged the country into its deepest recession on record.
Even though the UK economy is beginning to rebound as the government eases strict confinement measures -- private sector output grew rapidly in August according to data Friday -- analysts expect a surge in unemployment by the end of the year.
In October, Sunak plans to end the government's furlough scheme that is paying up to 80 percent of wages for around 10 million workers during the pandemic.
Agence France-Presse
LONDON - Britain's economic downturn fuelled by the coronavirus pandemic will be less severe than thought -- but the nation's surge in unemployment will delay any recovery, according to a forecast by the Bank of England.
The pound rallied on the update, which included news that the BoE held its main interest rate at a record-low 0.1 percent.
The BoE added that its cash stimulus programme used to prop up the economy before and during the coronavirus pandemic would remain at £745 billion ($967 billion, 813 billion euros).
The amount includes £300 billion added to its so-called quantitative easing programme since March when COVID-19 prompted a UK lockdown.
The economy was now expected to contract by 9.5 percent this year, the BoE said, altering its prior guidance of a 14-percent contraction.
"Nonetheless, the recovery in demand takes time as health concerns drag on activity," the BoE said in minutes of its latest regular meeting that took place Tuesday.
"GDP is not projected to exceed its level in 2019 Q4 until the end of 2021, in part reflecting persistently weaker supply capacity," it added.
The BoE estimated that UK gross domestic product would rebound in 2021 by nine percent, but down on an earlier forecast for output growth of 15 percent.
- Negative rates -
The Bank added that it "does not intend to tighten monetary policy until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the (bank's) two percent inflation target sustainably".
BoE governor Andrew Bailey told a virtual press conference that negative interest rates were in the bank's "toolbox", but said there were no immediate plans to use the controversial measure.
"The Bank thoroughly bashed the idea of negative interest rates, at least in the next six months or so," noted Ruth Gregory, senior UK economist at Capital Economics research group.
"It suggested that while negative rates can work in some circumstances, it would be 'less effective as a tool to stimulate the economy' at this time when banks are worried about future loan losses."
- 'Unemployment at 7.5%' -
The BoE on Thursday also forecast that Britain's unemployment rate would shoot higher to around 7.5 percent by the end of the year.
"Employment appears to have fallen since the COVID-19 outbreak, although this has been very significantly mitigated by the extensive take-up of support from temporary government schemes," the minutes said.
"Surveys indicate that many workers have already returned to work from furlough, but considerable uncertainty remains about the prospects for employment after those support schemes unwind."
UK companies -- from major retailers to airlines -- are axing thousands of jobs despite government efforts to safeguard employment during the pandemic.
The state has been paying up to 80 percent of wages for almost ten million workers under its furlough scheme, which finance minister Rishi Sunak plans to end in October.
Replacing the scheme is a stimulus package worth £30 billion, including bonuses for companies retaining furloughed staff and offering apprenticeships, amid fears of mass youth unemployment resulting from the virus fallout.
Britain's official unemployment rate stands at 3.9 percent, while annual inflation is at 0.6 percent.
Other recent official data showed Britain's economy tanked in the first quarter by 2.2 percent -- the biggest quarterly contraction for more than 40 years.
Economists expect there to have been a far sharper slump in the second quarter, or three months to June, placing Britain in a technical recession.
Confirmation is due Wednesday when the first official estimate on second-quarter output is published.
Agence France-Presse
LONDON - The United Kingdom has drawn up plans to require employers to cover 20 percent to 30 percent of furloughed employees' wages starting August to reduce the vast burden of the coronavirus crisis on government finances, The Times newspaper reported.
The United Kingdom on May 12 extended its job retention scheme - the centerpiece of its attempts to cushion the coronavirus hit to the economy - by four months but told employers they would have to help to meet its huge cost from August.
"The Treasury has drawn up plans that would require employers to cover between 20 and 30 percent of people’s wages," The Times said.
"They would also be required to cover the cost of employer’s national insurance contributions, on average 5 percent of wages."
The UK has over 250,000 confirmed coronavirus cases, with 36,000 deaths, according to government figures.
-reuters-
