The expected number of COVID-19 related job losses could be halved if the UK government were to quadruple planned crisis spending to £190 billion, according to a new report by think tank Institute for Public Policy Research (IPPR).
The IPPR briefing paper, written by Carsten Jung, George Dibb and Parth Patel, called for chancellor Rishi Sunak to “boost it like Biden” and provide a COVID-19 recovery package that matches the ambition of the new US president.
Joe Biden has proposed an extensive $1.9 trillion stimulus package to revitalise the US economy.
IPPR estimated that about nine million UK employees will be at risk of losing their job if extra support for businesses is not provided.
The think tank argued a larger stimulus package devoted to supporting businesses and workers is needed to "future-proof" UK industries and jobs.
According to the report, the economic boost so far announced by Sunak for the upcoming financial year (April 2021/22) is worth around 2% of the value of the entire UK economy pre-pandemic in 2019.
However, a significantly more powerful boost of £190 billion, equivalent to 8.6% of the value of the economy, would deliver faster recovery, stimulate business investment to its pre-pandemic level and halve the number of job losses.
Failure to deliver such a boost would risk condemning the UK to a “stagnation trap” with about half the rate of economic recovery.
IPPR defined a stagnation trap as years of slow growth that lead to a vicious cycle of business bankruptcies and layoffs.
This could in turn lead to lower business investment and leave unemployment at more than 10% in spring 2022.
Carsten Jung, IPPR senior economist and lead author of the report, said it is vital that the chancellor protects as many jobs as possible.
Speaking to HR magazine, Jung said: "As the economy slowly recovers, many jobs won’t immediately bounce back but will still be viable as we exit the most severe patch of this crisis.
“Supporting them will help employers, workers and families come out at the other end of this troubling time without unnecessary long-term damage to their lives and livelihoods.”