THEY are extraordinary figures in extraordinary times. UK government debt has risen above £2 trillion for the first time. In Scotland, GDP is 17.6% below the level it was six months ago – compare that to the financial crisis of 2008 when GDP fell by 4% over 18 months. We are in recession and the scale of the mountain is clear, as well as the challenge of crossing it.

Of course, everyone understands why we are here. This is not a normal year: the UK was faced with tackling coronavirus and saving lives and it meant effectively shutting down large parts of the economy and paying almost 10 million people not to go to work, at a cost of £70billion so far. But from August, employers have had to start contributing towards the cost of furlough and the scheme is expected to end in October. The question is: what then?

The Chancellor Rishi Sunak says there is no possibility of an extension because of the economic cost and he points out that most other countries are making similar moves to phase out their schemes. But one country that isn’t is Germany. The government there is expected to announce next week that it will extend Kurzarbeit, which was the model for furlough, from 12 months to two years and the reason the finance minister Olaf Scholz gave was clear. “The corona crisis won’t suddenly disappear in the next few weeks,” he said.

The German finance minister’s logic is hard to refute. The economic damage done by coronavirus will not stop suddenly in October just because the Chancellor has stopped the furlough scheme – indeed, the end of furlough will deepen the trouble for many employers and it’s likely the real nature and scale of the economic crisis will only become obvious then. There are some businesses that would be perfectly viable in normal circumstances that may go under if furlough is abruptly ended.

The picture also looks grim for particular sectors that continue to be badly hit. Some remain completely shut down – the country’s theatres and concert venues for example. Others, such as pubs and restaurants, are being forced to operate way below their normal capacity, thereby hitting profits. For these sectors, the furlough scheme will continue to be essential way beyond October and the UK Government should think again about an extension.

Naturally, the cost of such an extension is a concern, but it must be weighed against the possible costs of not extending, the biggest of which could be mass unemployment; the cost of borrowing has also never been so low – if ever there was a time to borrow for the sake of the economy, this is it. It might also be possible to limit the cost of extending the furlough scheme by targeting it at the areas that need it most.

The uncertain effect of withdrawing furlough, and the fact that it will not apply equally across the economy or different parts of the UK, also points to a particular difficulty for the Scottish Government. Since the beginning of the pandemic, the Scottish, Welsh and Northern Irish governments have taken slightly different decisions at different times and yet the devolution settlement means the Scottish Government could not extend furlough in Scotland because it does not have the borrowing powers to fund it. The First Minister has repeatedly complained about this and it is time the UK Government listened.

There are other ideas the UK Government should consider as we hopefully move from crisis into containment into recovery. Scrapping or freezing employers’ national insurance payments for example. A holiday on business rates would also help the country’s town centres to begin the fight-back. All of it will cost – and all of it will have to be paid back in some way in due course – but the alternative is a cliff-edge in October that will deepen the economic crisis rather than ease it. The scale of the mountain we have to climb is clear and the Scottish and UK governments will have to take unprecedented action for a long time to come yet to ensure we get over it.