LONDON- Britain should do more to help the unemployed find work, and fixing the huge hole in its public finances can wait until a recovery from the COVID-19 pandemic is well under way, the Organization for Economic Co-operation and Development said.
The world’s sixth-biggest economy was at “a critical juncture” as the crisis threatens to worsen its productivity and inequality problems, and Brexit could also deal a major blow, the watchdog said in an annual report.
“Decisions made now about management of the COVID-19 crisis and future trade relationships will have a lasting impact on the country’s economic trajectory for the years to come,” it said.
Britain’s economy shrank by the most in the Group of Seven nations in the second quarter and the recovery lost momentum in August. Now the government is tightening its coronavirus restrictions, which will slow economy further and cost more jobs.
The OECD forecasts Britain’s economy will slump by 10.1 percent this year before growing by 7.6 percent in 2021 when unemployment will average 7.1 percent, up from 4.5 percent now.
Finance minister Rishi Sunak is replacing his 50 billion-pound ($65 billion) job protection scheme with narrower support. He is also trying to help the unemployed find jobs in sectors less affected by the crisis.
“Additional spending on active labor market measures are welcome and further increases would help to accompany unemployed workers in their job search and ease adjustment to new working arrangements,” the OECD said. – Reuters