World Sunak Announces Crisis Plan to Save U.K. Jobs From Virus
Europe imposes fresh curbs as global cases top 30 million
Large parts of Europe on Friday geared up for broad new restrictions to stop the coronavirus, after infections worldwide topped 30 million and the World Health Organization warned of "alarming rates of transmission". Britain is limiting gatherings and France is set to roll out new curbs for major cities as governments across the continent battle fresh spikes of the disease. More than 943,000 people have now died from Covid-19 since it first emerged in China late last year, according to an AFP tally, with Europe accounting for more than 200,000.
(Bloomberg) -- Chancellor of the Exchequer Rishi Sunak set out his plan to rescue millions of jobs and businesses from a winter crisis as the coronavirus pandemic again threatens to derail the U.K. economy.
In an emergency statement to Parliament, Britain’s finance minister announced:A six-month “Job Support Scheme” to subsidize the wages of people in part-time workExtended loans for companies hit by Covid restrictions, with extra flexibility for repaymentsAn extended reduction of value added tax to 5% for the hospitality and tourism industriesFresh support for the self-employed
But economists -- and the chancellor himself -- warned Thursday’s package won’t stop a wave of redundancies when the current more generous support program ends. The measures also continued to exclude a swathe of self-employed people who fell through the cracks of support programs rolled out at the start of the pandemic.
Sunak Urged to Save U.K. Businesses From ‘Ruin’ of Covid Curbs
Struggling businesses were just getting back on their feet after the U.K.’s first national lockdown sparked the country’s deepest recession in over a century. Now they face another six months of hardship after Prime Minister Boris Johnson unveiled a fresh tranche of coronavirus restrictions that will last until spring 2021. Johnson’s announcement immediately put pressure onto Chancellor Rishi Sunak to set out how the government intends to protect jobs and help businesses through the autumn and winter, just as it winds up its support programs.
Sunak painted a bleak picture of the impact of Covid-19, saying the disease and restrictions are likely to last for at least the next six months. While the Treasury’s primary goal remains to protect jobs, he said, the methods of doing so “must evolve.”
“Our economy is now likely to undergo a more permanent adjustment,” Sunak told the House of Commons. “I cannot save every business, I cannot save every job. No chancellor could.”
Sunak scrapped his plan for a full-scale budget in a sign of the disruption and uncertainty the resurgent virus threatens to bring to the country. Prime Minister Boris Johnson imposed fresh curbs on the public earlier this week and warned further measures may be needed in what is likely to be six difficult months ahead.
Joe Biden endorsed, Trump excoriated by nearly 500 retired top military, national security officials
Nearly 500 retired generals, admirals and senior civilian national security officials endorse Joe Biden and blast President Donald Trump.Dodds: Asked Sunak 40 Times for Targeted Wage Support Scheme
The centerpiece of Sunak’s announcement was a new jobs support program to succeed the furlough policy that ends on Oct. 31 and has supported more then 9 million jobs at a cost of 39 billion pounds so far.
Under the furlough program, the government paid people who were unable to return to their workplaces because of Covid restrictions as much as 80% of their wages.
The replacement policy will pay subsidies to workers who are able to return to their jobs for at least a third of their normal hours. Their employer will pay the hours they work, and the government and employer will each pay a share of wages for the hours they don’t work to help top up their earnings.
It means that workers on the new program will be guaranteed at least 77% of their normal wages. But it also means employers could be on the hook for 55% of wages for an employee working just a third of their normal hours.
“You can’t wave a magic wand and unemployment will stop rising anymore,” Philip Shaw, chief economist at Investec Bank Plc, said by phone. “The measures are a sensible middle ground for the government to prevent the economy falling off a cliff.”
Facebook Sued Over Kenosha Shootings Using 19th Century Law to Combat KKK
The social network is accused of helping militia groups conspiring to interfere with civil rights by hosting far-right pages encouraging violence against BLM protesters.After Beirut blast, Lebanese businesses crowdfund to rebuild
What Bloomberg’s Economists Say
“The big risk is employers shun his new wage subsidy scheme rather than paying up for employees on reduced hours. A spike in unemployment as the economy begins its adjustment to a new normal appears inevitable.”
-Dan Hanson and Jamie Rush. Read their U.K. INSIGHT
“The sources of our economic growth, and the kinds of jobs we create will adapt and evolve to the new normal,” Sunak said.
The chancellor promised to extend grants to the self-employed “on similar terms and conditions as the new jobs support scheme.”
Sunak also deferred the deadline for new applications to a set of government-backed loan programs until the end of the year, and said loans could be repaid over 10 rather than six years. More than a million of the smallest companies taking out “bounceback loans” can now choose to make interest-only repayments and suspend payments altogether for up to 6 months, he said.
There was extra help for businesses such as pubs and restaurants, which are required to close at 10 p.m. from Thursday. With millions of workers at risk of losing their livelihoods if the crisis worsens, Sunak extended a VAT cut for the industry that was due to end Jan. 12 until the end of March. That means VAT will remain at the reduced rate of 5% rather than 20%.
With 40 Days until the Election, Donald Trump is Doing Worse in Swing State Polls Than This Time in 2016
Democratic nominee Joe Biden's polling average is considerably stronger than Clinton's four years ago.In Pennsylvania, Michigan, Wisconsin, Florida, North Carolina and Arizona, Biden has a 4 percentage point lead over Trump, according to an analysis from Real Clear Politics (RCP). Back in 2016, Clinton held a smaller 1.3 point lead over Trump in these key states.
Half a million other businesses which deferred 30 billion pounds of VAT payments until March will now be allowed to spread them over 11 repayments, with no extra interest.
Sunak’s measures aim to prevent a gradual increase in job losses from snowballing into a crisis comparable to Margaret Thatcher’s time as premier, when unemployment climbed to almost 3.3 million as the economy went through a painful overhaul. His actions will likely be followed by the Bank of England, which is widely anticipated to deploy another round of monetary stimulus as early as November.
Economists expect the latest restrictions on businesses to damage the economic rebound. If the government goes further and imposes blanket lockdown restrictions for two weeks at the start of October, output would shrink 3.9% in the fourth quarter, according to Bloomberg Economics.
Sunak and Johnson are trying to strike a balance between getting Covid-19 under control and keeping enough of the economy open to avoid damaging mass redundancies. The first peak of the disease earlier this year hit the U.K. with the highest death toll in Europe and the country’s deepest recession in more than a century.
Johnson’s government has faced mounting criticism over its public health response to the outbreak and is under political pressure to do more to help avoid an economic nightmare as the disease spreads rapidly again.
(Updates with details starting in bullet points.)
For more articles like this, please visit us at
©2020 Bloomberg L.P.
Rishi Sunak's Germany-Lite Jobs Plan Has a Few Holes .
It's good that Boris Johnson's government will still offer some kind of job support. But Britain’s labor market is very different to the continent’s.It’s been obvious for a while that the Covid-19 economic crisis won’t be over by Halloween, when the U.K.’s successful furlough program is due to end. Many called for the program to be extended, as France and Germany have done, or at least tailored to help struggling sectors such as travel and hospitality and preserve what Sunak has called “the dignity of work.