UK reopens gyms, pools, as Treasury chief warns of recession

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Britain's Chancellor of the Exchequer Rishi Sunak visits the Worcester Bosch factory to promote the initiative, Plan for Jobs, in Worcester, England, Thursday July 9, 2020. (Phil Noble/Pool via AP)

LONDON – The U.K.'s Treasury chief acknowledged Thursday that the country faced unprecedented economic times, entering one of the most severe recessions it has ever seen as it emerges from the COVID-19 pandemic.

A day after revealing his spending plans to boost the economy in a mini-budget, Rishi Sunak sought to sell his ideas to the nation — particularly the expensive program to help furloughed employees return to work after the government program now paying them expires in the fall. More than 9 million workers gave been furloughed under a the program, in which the government has paid 80% of their salaries.

Under Sunak's plan, the government will pay companies a 1,000 pound ($1,260) bonus for each employee they take back. That could cost the Treasury as much as 9.4 billion pounds, and critics are wondering whether it makes sense.

Though he acknowledged he couldn't save every job, Sunak told the BBC he was "throwing everything,’' he could at stemming the losses.

“We are entering one of the most severe recessions this country has ever seen,’’ Sunak told the BBC. “That is of course going to have a significant impact on unemployment and on job losses. I am acting to try and mitigate as much of that as possible.’’

The gloomy prediction was underscored by respected think tank the Institute for Fiscal Studies, which questioned whether the billions of extra spending announced would be cost effective. The institute’s director, Paul Johnson, warned that a “reckoning, in the form of higher taxes” would have to come eventually.

“Even in a crisis we shouldn’t ignore the basics,” he said. “A lot, probably a majority, of the job retention bonus money will go in respect of jobs that would have been, indeed already have been, returned from furlough anyway.''

The country's revenue and customs chief executive, Jim Harra, also raised concerns in a letter to Sunak, asking for a ministerial direction or a formal order to go ahead with the plan.

“The advice that we have both received highlights uncertainty around the value for money of this proposal,” he wrote.

The furlough program was one of several measures introduced by Prime Minister Boris Johnson's government to limit unemployment from the pandemic.

Economic activity dried up when most businesses closed as part of a nationwide lockdown imposed March 23. Those measures are gradually being eased, with the reopening of shops, pubs and restaurants.

The government hopes employers will help get the country back on track during a severe downturn - in March and April alone, the U.K. economy shrank 25%. Many economists think unemployment could more than double to over 3 million this year, levels last seen in the 1980s.

The cuts just kept coming Thursday. Department store chain John Lewis said it will permanently close eight of its stores, putting 1,300 workers at risk. Burger King UK warned of 1,600 jobs losses while Boots, the pharmacy chain, announced 4,000 cuts or 7% of its workforce, even though many of its shops stayed open during the lockdown.

The government announced the latest easing of lockdown Thursday, saying the public will soon be able to return to gyms, swimming pools and beauty parlors.

Culture Secretary Oliver Dowden says that outdoor pools in England can begin re-opening beginning Saturday, with indoor pools, gyms and other sports facilities to follow on July 25.

The guidance will also enable competitive grassroots team sports to resume, beginning with cricket this weekend.

Dowden also gleefully told a virtual news conference at Downing Street that outdoor arts performances — including theaters, opera, dance and music — will also be able to perform outside, though audiences will be subjected to social distancing rules.

Scotland, Wales and Northern Ireland are reopening at slightly different paces.