While Britain is climbing out of an economic sphere, tough questions are being asked

LONDON – To understand why Britain has spiraled into the deepest recession of its modern history, go for a walk in central London, no longer a ghost town but still a shadow of its once bubbling self.

Shaken shops have grabbed the shopping promenade on Oxford Street. Theaters in the West End are dark, office towers abandoned. Beneath the ground, the tube is a grim parade of signs warning passengers to wear face masks and keep their distance. With traffic at barely a quarter of last year’s levels, that’s not hard.

Only restaurants, buoyed by a government incentive program that subsidize the food of diners, show signs of life. But like the government’s widespread furlough program that guaranteed 80 per cent of the salaries of millions of workers, the “Eat Out to Help Out” promotion will soon fall, and the government has to make difficult choices about whether they the support should expand.

Undoubtedly, Britain has been ravaged by the coronavirus, easily the hardest hit of any European nation, both in public health and the economy.

“What we are struggling with is something unusual, and we do not have a game book for how to tackle it,” Treasury Chancellor Rishi Sunak told the BBC on Wednesday after the Office of National Statistics reported that the economy in the second quarter with an unabated 20.4 percent contraction.

This was the deepest quarterly decline of any major European country, and led to a fresh round of handcuffs in Britain, which also earned the unusual distinction of carrying out the highest death toll from coronavirus in Europe, with more than 51,000 deaths. .

In part, Britain’s difficult economic figures reflect an escape from timing: Prime Minister Boris Johnson set up a lockdown a week later than most of his European neighbors and lifted the restrictions later as well. This means that Britain suffered more damage in the second quarter than France, Italy or Germany, which began to reopen during that period.

But Britain’s economic fears are also linked to its broader order with the virus. Because its outbreak was so widespread, prolonged and deadly, economists said, the fear of contamination remains higher in Britain than anywhere else. Despite government urgings, people still need to restore normal life, especially in cities such as London, where working from home is an alternative for many.

Google, which uses mobile signals to track foot traffic to offices, shops, restaurants and transit stations, shows that commercial activity in Britain has been dragging down Germany, France, Italy and Spain since mid-May, although the gap began to narrow.

“When you have a massive outbreak, people will respond by being cautious and it will take a while for confidence to come back,” said John Springford, the deputy director of the Center for European Reform, a research institute. “It makes sense that London will be one of the toughest places.”

For all its talk of rebuilding, Britain still has the strictest set of restrictions in place of any major European country, according to the Blavatnik School of Government of Oxford University, which follows the strictness of restrictions implicit restrictions, from schools and workplace closures to travel agreements.

It is even more shocked than Spain, which has recently seen a spike in infections urging the British government to set up a 14-day career on people who traveled there and returned to Britain.

Like Spain, Britain is particularly vulnerable to a sudden decline in consumption, as its economy is more dependent on services, including tourism and hospitality, than that of Germany or France. Economists said it was no coincidence that Spain’s contraction in the second quarter, at 18.5 percent, was closest to that of Britain. The German economy, with its extensive industrial base, shrank by 10.1 percent, while France declined by 13.8 percent.

None of this loses the pressure on Mr Johnson’s government, which has come under heavy scrutiny for its handling of the pandemic. Until now, their economic measures have isolated people from the sudden dislocation of losing their existence.

But Mr Sunak insists the government will stop subsidizing wages at the end of October. He has so far resisted fierce pressure from the opposition and other critics to soften his stance.

“A decline was inevitable after the shutdown, but Johnson’s employment crisis was not,” said Anneliese Dodds, the Chancellor of the Labor Party’s chancellor, who said the government should continue targeted support for vulnerable workers.

Mr Sunak states that the government can not guarantee a definition of pay, as some jobs will never return after the pandemic. Encouraging people to look for new jobs is essential to give them a sustainable future.

Another sharp spike in unemployment will be hard for the Conservative government of Mr. Johnson, to resist, especially since it ran on a platform to bring prosperity to the industrial north of Britain. The drum of job loss is already underway: On Tuesday, the troubled department chain, Debenhams, announced 2,500 cuts on top of a previously announced 4,000.

Critics said it was unreasonable for the government to force people back into the labor market when Britain’s test, trace and isolation system was not robust enough to give them confidence that they could move safely. This is especially true in parts of the country such as Leicester and Greater Manchester who have suffered recent outbreaks and have been placed under local lockdowns.

“The government has taken a one-size-fits-all approach to ending the job preservation program,” said James Smith, research director at the Resolution Foundation, a London-based research institute. “But the economic response needs to be focused on where the economy has been hit hardest.”

Mr. Sunak has sought to do so with “Eat Out to Help Out,” a £ 500 million ($ 654 million) program to support the beleaguered restaurant sector by subsidizing the mouths of customers with a maximum of £ 10 ($ 13) per person. As of August 9, the government said people were buying 10.5 million foods with the incentive.

At the German Gymnasium, a cavernous restaurant next to Kings Cross Railway Station, the promotion drew a respectable crowd Tuesday night – similarly, general manager Sam Bernard said after a weekend outing. He said his only request would be for the government to extend it until Thursday night.

Like most restaurants, the German Gymnasium has dark perspectives. It depends on business of Google and Facebook, which have offices nearby. But both companies have told their employees they can work from home until at least next summer. And the government subsidy ends on August 31st.

“We can not forever rely on government support,” Mr Bernard said. “If it stops, we’ll just have to take care of ourselves and think a little outside the box.”

Anna Joyce contributed reporting.