‘Can’t save every business and job’
STERLING rose against both the dollar and the euro last Friday (25) as investors hoped Britain’s new scaled-back job support scheme will be followed by other stimulus measures.
Chancellor Rishi Sunak announced a new scheme to support jobs as Covid-19 cases surged again, but warned that the government will support only “viable” employment.
In the Commons last Thursday, the chancellor unveiled plans to extend loan repayments for businesses and delay ending a tax cut for the hospitality sector that has been drastically hit by coronavirus restrictions.
Despite the state support, unemployment looks set to surge by the end of the year, with major employers from British Airways to Rolls-Royce and Marks & Spencer shedding jobs rapidly.
“I cannot save every business, I cannot save every job,” Sunak told parliament as he announced his Winter Economy Plan, which replaced a planned budget statement and set out a six-month replacement for the jobs furlough scheme.
“As the economy reopens it is fundamentally wrong to hold people jobs that only exist inside the furlough.”
Prime minister Boris Johnson said the chancellor was right to warn the public.
Sunak later told reporters it was impossible to predict how many jobs his new measures would save, and that forecasts of fast-rising unemployment by the Office for Budget Responsibility and Bank of England (BoE) “don’t make for good reading”.
Britain’s unemployment rate rose to 4.1 per cent in the three months to July with 1.4 million out of work, and the BoE forecast last month it would jump to 7.5 per cent by the end of the year if there was no replacement for the existing furlough scheme.
Under the new “more targeted” programme, Sunak said government support would only be available to workers whose employers keep them on at least a third of their normal hours.
If employers agree to pay staff a third of their salary for unworked hours, the government will contribute another third, up to £698 a month. Self-employed workers can apply for grants of up to £1,875.
Economists estimate that this will cost the government around £3 billion-£4 billion over the programme’s six-month life, compared with more than £50bn for the eight-month-long furlough plan.
The Confederation of British Industry said would help save hundreds of thousands of jobs.
Labour criticised the delay in introducing the jobs measure, which it said had hurt business confidence, while the general secretary of the Public and Commercial Services trade union, Mark Serwotka, called it “a plaster to cover a gaping wound”.
The Resolution Foundation think-tank said it would be cheaper to have one full-time employee than two staff working part time.
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