By David Milliken and William James
LONDON (Reuters) – Britain’s finance minister will announce more job protection plans on Thursday, likely to include a new wage subsidy scheme, to stem unemployment in the pandemic-ravaged economy after existing safeguards expire next month.
Rishi Sunak had ruled out a wholesale extension of the Coronavirus Job Retention Scheme, which supported 8.9 million private sector jobs at its peak in May, but a growing second wave of COVID-19 cases has brought clamour for a replacement.
He will announce a new wage subsidy to encourage part-time returns to work instead of full furlough pay, plus an extension of a sales tax cut for the hospitality and tourism industry until the end of March, the Times newspaper said.
Sunak was due to explain the government’s so-called “Economic Winter Plan” in parliament at around 1045 GMT.
Health Minister Matt Hancock told LBC radio workers would receive as much support as “feasibly possible” during the pandemic which has killed nearly 42,000 people in Britain, the worst death toll in Europe.
The United Kingdom is borrowing record amounts to pump money through an economy on track for its biggest annual contraction in at least 100 years.
‘WE NEED TO RESPOND’
Sunak will not now hold a full budget later this year, due to the uncertainty created by rising COVID-19 cases, which this week showed their biggest daily increase since May.
“No one wanted to be in this situation but we need to respond to it,” a finance ministry source said.
Earlier this week, the government dealt a blow to the hospitality sector by ordering bars and restaurants to shut by 10 p.m., halved the maximum number of people allowed at weddings, and backtracked on calls for employees to return to offices, rather than work from home.
Curbs on socialising are likely to last another six months.
Sunak will also allow companies to apply for government-backed loans until the end of November and he will extend the terms of the loans from six to ten years, helping to reduce monthly repayments, the Times reported.
Sunak has said he would be “creative” in finding a way to support employment but has also repeatedly stressed it will not be possible to save every job.
The Bank of England forecast last month that unemployment would jump to 7.5% by the end of the year if there were no replacement for the existing furlough scheme ending at the end of October, up from 4.1% in the three months to July.
(Editing by Andrew Cawthorne)
