Covid aid set to end, Brits fear new crisis

High costs, supply crunch fuel gloom

LONDON — Millions of people across the U.K. are facing a long, bleak winter as the rising cost of living coincides with the end of government programs that once shielded households from the economic fallout of the coronavirus pandemic.

The biggest of those programs, which sought to preserve jobs by subsidizing the wages of workers whose hours were cut during the pandemic, ended Thursday. Some 1.6 million people were still supported by the so-called furlough program in September, down from a high of 8.9 million in May of last year.

Also, a temporary increase in welfare payments ends next week, cutting benefits by almost $1,480 a year; and protections for renters squeezed by the pandemic are being phased out. All of this takes place as 15 million households face a 12% jump in energy bills, adding to consumer price inflation that reached the highest level in more than nine years in August.

Diana Gaglio has been in the economic cross hairs of the pandemic for the past 18 months.

The 53-year-old from Bedfordshire, north of London, was furloughed from her job as entertainment manager for a holiday company when covid-19 gutted the travel industry, then lost her job altogether just before Christmas. Now her temporary job at a virus testing center is coming to an end, just as the government scraps the emergency program that provided an income the last time she was out of work.

“The market is going to be flooded,” Gaglio said. “If it wasn’t hard already, it’s going to be harder.”

Adding to the sense of gloom, drivers are facing long lines to fill their tanks after a truck driver shortage curtailed fuel deliveries. Newspapers warn of a scarcity of everything from toys to turkeys this Christmas unless the crisis is resolved soon.

“The country and the labor market is in for a really bumpy autumn,” said Charlie McCurdy, an economist at the Resolution Foundation, a think tank focused on improving living standards for those on low to middle incomes. “We can expect a living standard squeeze for families across the country.”

The bad news is fueling concerns about Prime Minister Boris Johnson’s leadership and heaping pressure on him to do more to help struggling consumers.

Keir Starmer, leader of the opposition Labor Party, on Wednesday mocked Johnson’s promise to “level up” incomes and economic opportunity.

“Level up?” Starmer said during a speech at the party’s annual conference. “You can’t even fill up.”

The government has resisted calls to reverse course, saying the economy is rebounding from the pandemic and it is time to end emergency support programs.

Treasury chief Rishi Sunak said Thursday that other programs, including job training, recovery loans for businesses and a recent increase in housing benefits would remain in place. The government has spent $538 billion to support the economy during the pandemic.

“With the recovery well underway, and more than 1 million job vacancies, now is the right time for the scheme to draw to a close,” he said of the furlough program. “But that in no way means the end of our support.”

The U.K. economy has recovered strongly since the depths of the pandemic, although gross domestic product remains about 2.1% smaller than it was in February 2020, according to the Office for National Statistics.

The recovery has pushed job vacancies to record levels as employers hire workers to meet increasing demand.