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The Economy Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Data from the Office for National Statistics shows that the UK economy shrunk by a record amount (9.9%) last year, more than twice the previous largest annual fall. However, it grew by 1.2% in December when some restrictions were eased, making it likely that the UK can avoid a double-dip recession.

As stringent Covid-19 restrictions are expected to remain elevated until early spring, along with the effects of post-Brexit adjustment, the NIESR’s forecast is for GDP growth to decline by 3.8% in the first quarter of 2021.

The Treasury Committee has published the third report of its inquiry into the Economic Impact of Coronavirus – ‘Gaps in Support and Economic Analysis’. Its recommendations include: Government must set out criteria for how and when it will lift lockdown restrictions with economic and epidemiological modelling to support it; HM Treasury should be more transparent with economic analysis that informs Government decisions; HM Treasury should use 2019-20 tax returns to help the newly self-employed; Eligibility for Government support should be extended to those missing out, including limited company directors and freelancers.

The IPPR think tank released a new briefing paper, in which Chancellor Rishi Sunak is urged to quadruple the Government’s planned crisis spending to £190bn in order to restore jobs, investment, and services. Failure to deliver such a boost risks condemning the UK to a ‘stagnation trap’ with about half the rate of economic recovery. It would mean lower business investment and leave unemployment at more than 10% in spring next year.

The British Chambers of Commerce published a new COVID survey that finds that 25% of respondents say they will have to make staff redundant if Government financial support ends in March and April. The BCC is calling on the Government to keep financial support going while firms reopen and rebuild, with a clear roadmap for reopening to help increase business confidence.

Similarly, a £13bn tax rescue package could be key to reviving the economy, boosting the hospitality sector and saving summer holidays, according to a report from The TaxPayer’s Alliance. The report claims an extension to the Chancellor’s business rates holiday and VAT reduction would create tax cuts of £9.4bn and £3.5bn respectively in 2021-22, a total of £12.9bn. If extended until after 2022-23 as proposed, this would generate total savings of £25.6bn for the sector over the two years.

Labour set out new plans to back British businesses, as it calls on the Government to help ease the Covid-debt burden faced by firms across the country. The party suggested converting the Bounce Back Loans (BBLs) scheme into a ‘student-loan style’ arrangement, so that businesses only have to start repayments when they are making money. Labour also called for the establishment of a British Business Recovery Agency that would manage the Coronavirus Business Interruption Loans Scheme (CBILs) and Coronavirus Large Business Interruption Loan Scheme (CLBILs) in order to create terms that secure the future of businesses, including employee ownership, preference shares and subordinated debt.

Shadow Chancellor Anneliese Dodds’s business-backing plan comes after a week in which Labour has called for business rate holidays and VAT cuts to be extended and for a smarter furlough scheme to last until necessary health restrictions are lifted.

Almost two millions workers were unemployed or fully furloughed in January and had been for at least six months, according to a report by The Resolution Foundation. The report finds that the number of people on the Government’s Job Retention Scheme (JRS) has risen to around 4.5m during the current lockdown, almost half of the peak during the first lockdown; indicating that firms have adapted to operating during the pandemic.

The report calls for the full JRS to remain in place for several months after public health restrictions have been lifted to give firms time to bring staff back, and remain in place for longer in sectors still subject to legal restrictions, such as hospitality and leisure.

The Health Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Efforts to roll out the Covid-19 vaccine have continued, with the latest figures showing that 13,058,298 have had their first dose.

Close to meeting the Government’s 15 February target of offering the vaccine to everyone 70 and over, to all frontline NHS and care staff, to older care home residents and to all those who are clinically extremely vulnerable, the Prime Minister Boris Johnson called for everyone who hasn’t had a vaccine, but is eligible, to book a appointment and take up the offer.

He also said that, if we can keep the pace and supplies of vaccines up, the Government hopes to reach everyone in cohorts one to nine, which would include all those over 50, by the end of April. He said that it is vital that the public takes up their offer of a vaccine ‘to save lives, prevent serious illness, and so the whole country can take another step on a long and hard road back to normality.’

New measures have been brought in at the border to increase the country’s security against new variants of concern arriving from abroad. As well as having to take a predeparture test, and quarantine for 10 days upon arrival, all international arrivals, will soon be required by law to take further PCR tests on day two and day eight of that quarantine.

From Monday, those arriving from ‘red list’ countries will have to stay in an assigned hotel room for 10 days from the time of arrival and carry out their quarantine there. The new measures have come with strict enforcement plans, including a £5,000 fixed penalty notice, rising to £10,000, for arrivals who fail to quarantine in a designated hotel, and for anyone who lies on a passenger locator form and tries to conceal that they’ve been in red-list country in the 10 days before arrival will face a prison sentence of up to 10 years.

Announcing the new measures, Health and Social Care Secretary said: ‘Our fight against this virus has many fronts. And just as we’re attacking this virus through our vaccination programme, which is protecting more people each day, we’re buttressing our defences through these vital measures so we can protect the progress that we’ve worked together so hard to accomplish.’

Office for National Statistics figures published this week showed that the number of deaths registered in England and Wales in the week ending 29 January was 18,448; this was 228 fewer deaths than in the previous week. The number of deaths was 44.6% above the five-year average.

Responding to the figures, Dr Layla McCay, director at the NHS Confederation, said: ‘These figures are a clear reminder of the heavy human cost of the Covid-19 crisis. This is still a very real emergency, with more than 112,000 lives tragically lost to the virus across the UK, and nearly 30,000 people in hospital with Covid-19 – more than at the height of the first peak last spring.’

Nuffield Trust said the figures show the ‘harsh reality of the second wave’, adding: ‘It is striking how long and widespread the impact of the second wave has been. In all regions, the number of deaths recorded has been above the five-year average for 12 weeks running. The lasting impact on families and carers after this long period cannot be underestimated.’

Finally, a report by the Public Accounts Committee on supply and procurement of Personal Protective Equipment (PPE) published this week argued that front line health workers were left ‘risking lives to provide treatment and care’. It said that an ‘inadequate’ pandemic plan and equipment stockpile left frontline workers having to care for people with Covid-19 or suspected Covid-19 without sufficient PPE to protect themselves from infection.

Surveys by staff representative organisations showed at least 30% of participating care workers, doctors and nurses reported having insufficient PPE, even in high-risk settings. PPE from central government was sometimes not usable and the Government’s emergency helplines referred them to suppliers that did not have PPE.

The British Medical Association (BMA) has welcomed the Committee’s recommendation that the Government improve its approach to managing and distributing stocks of PPE. BMA council chair Chaand Nagpaul said: ‘The Government needs to listen to the experiences of doctors, of all health and social care workers, understand the life-threatening risks they had to take to care for their patients and then, do everything possible to make sure no healthcare worker is ever put at risk in this way again.’

NHS Providers said the Committee report highlights the difficulty in accessing PPE supply in the early pandemic stages: ‘PPE supplies are now much improved, including in social care settings, where the situation was worst. UK manufacturing efforts have been successful, and it is important that these continue to ensure sustainability of future supplies.’ It argued that ensuring staff have the right equipment to do their jobs safely is an ‘absolute priority’.

The Economy Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

It has been reported that proposals to support the economic recovery will be published in the week of 22 February, alongside a ‘road map’ out of the current Covid-19 lockdown in England.

In a letter to business secretary Kwasi Kwarteng, the Confederation of British Industry (CBI) warned that the current lack of clarity for businesses is hindering investment. CBI has called for more details from the Government on which sectors will be allowed to reopen first and how any new tier system will work, to enable them to plan ahead. Running alongside the roadmap, CBI argued there must be clear parameters for determining what, and for how long, economic support measures remain in place. On this, the trade group UKHospitality is urging the Government to extend the current VAT cut for the hospitality sector for another 12 months, alongside a business rates holiday for 2021-22.

Rishi Sunak has been warned by the leaders of Britain’s most influential business groups and the trade union movement that he risks plunging Britain into a period of mass unemployment unless he extends the furlough scheme.

Before the upcoming budget on 3 March, both sides of industry told the Chancellor that the economy was too fragile to end the wage subsidy scheme at the end of April and that he risked undoing the efforts to protect jobs over the past year if he did so. Frances O’Grady, the TUC general secretary, said Sunak should announce immediately that furlough would remain in place until the end of the year. The British Chambers of Commerce also called for an extension. It warned that the planned phased relaxation of lockdown restrictions does not mean that the problems of business are at an end.

Last Friday marked the deadline for applications to the third phase of the Self-Employed Income Support Scheme (SEISS). The Labour Party suggests that 2.4m self-employed people who rely on the SEISS scheme will be ‘left in the dark’ for weeks, with no announcement on the fourth grant due until the Chancellor’s 3 March Budget.

Bridget Phillipson MP, Labour’s Shadow Chief Secretary to the Treasury said that ‘leaving entrepreneurs in the dark about future support risks pushing even more out of business – and that will damage our recovery’. Labour also called on the Chancellor to open his support scheme for the self-employed to the 200,000 people who only have a 2019/20 tax return.

The APPG on Poverty released its report on the impact on poverty of not keeping the £20 uplift in Universal Credit and working tax credits, and of not extending the uplift to legacy and related benefits. The report references modelling carried out by Policy in Practice which found that if the uplift was withdrawn, 683,000 households, including 824,000 children, would no longer be able to afford to meet their essential needs. This number grows by 11% when the impact of the two-child limit is taken into account.

Research by Save the Children indicates that parents who received the uplift predominantly spent the money on essentials such as food, rents and bills, and items for home schooling. The APPG received multiple submissions calling for the extension of the uplift to legacy and related benefits. This was particularly pertinent as most people claiming legacy and related benefits are disabled, carers or have a long-term illness – the majority of whom fall in the poorest 10% of the population.

Similarly, according to a report by the Trussell Trust, nearly a quarter of a million parents who receive Universal Credit say they would be likely to cut back on food for their children if the £20 uplift to the benefit is removed. Over 40% of people who receive the benefit, around 2.4 million people across the UK, would be likely to cut back on food for themselves, the report reveals, and the charity forecasts a rise in the need for food banks if the £20 uplift is removed. It recommends maintaining the uplift and extending it to legacy benefits.