UK hatches a £30bn plan to save jobs and revive battered economy
• Rewards programme for employers who are standing by their workers
British chancellor of the exchequer Rishi Sunak has set out a radical blueprint to save jobs and pump life into the coronavirus battered economy, including tax cuts on home-buying and dining out, and a new bonus for employers who don’t fire their staff.
“We face profound economic challenges,” he said in the House of Commons on Wednesday, laying out a stimulus package he intended to expand on in a budget and spending review in autumn. “In just two months, our economy contracted 25% — the same amount it grew in the previous 18 years.”
Sunak promised to stand by companies that kept faith with workers and to do all he could to save jobs and give families hope in coming months. His £30bn package included raising the stamp duty threshold for purchases of property to £500,000, until March 31. Officials said this would mean nearly nine out of 10 people buying homes would pay no stamp duty. There would be a six-month cut in sales tax for restaurants, hotels and attractions to 5% from 20%, a £9bn bonus to protect workers returning from furlough and a promise of discounted meals in restaurants countrywide in August.
Sunak has a huge task in pulling the world’s fifth-biggest economy out of what could be its worst recession in three centuries.
Unemployment is expected to spike as he unwinds unprecedented government programmes funding the wages of more than 12-million workers.
Outlining his proposals on Wednesday, the chancellor said he would not be held back by political ideology, even after calls from within his party to avoid piling up national debt.
“Where problems emerge, we will confront them. Where support is justified, we will provide it. Where challenges arise, we will overcome them,” he said. “We entered this crisis unencumbered by dogma and we continue in this spirit, driven always by the simple desire to do what is right.”
He announced a new programme to reward employers taking back furloughed workers and keeping them on continuously through to end-January.
Businesses will get a £1,000 bonus per employee who returns from furlough in a policy of that could entail as much as £9bn.
PRICE CUT
Sunak cut the VAT rate on food, accommodation and attractions to 5% from 20%. The measure will last until January 12, in what he said was a £4bn catalyst.
He also announced an “Eat Out to Help Out” discount, offering a 50% price cut on meals at participating restaurants from Mondays to Wednesdays in
August. The Treasury also unveiled a £2bn programme to pay the wages of more than 200,000 young workers, bringing to more than £6bn the value of measures to support jobs and environmental programmes announced by Sunak in the runup to his statement.
That’s in addition to £5bn of infrastructure spending on schools, hospitals and roads, announced last week by Prime Minister Boris Johnson, who pledged the UK will “build, build, build” to emerge from the crisis.
Bond markets have shrugged off Sunak’s latest largesse, which doesn’t stand out in the current climate of high spending. Yields on 10-year bonds fell one basis point to 0.17%.
Investors are more focused on the BOE’s plans for asset purchases and the latest issuance plans from the debt management office, which are due on July 14.
Pub group Marston’s erased an earlier loss to gain up to 3.5%, while Wagamama Restaurant Group leapt as much as 7.7% before trimming the gain.
WE ENTERED THIS CRISIS UNENCUMBERED BY DOGMA AND WE CONTINUE, DRIVEN BY THE SIMPLE DESIRE TO DO WHAT IS RIGHT