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UK announces £30 billion Covid-19 stimulus package aimed at saving jobs

Britain's Chancellor of the Exchequer Rishi Sunak reacts as he leaves Downing Street, in London, UK, July 8, 2020.
Britain's Chancellor of the Exchequer Rishi Sunak reacts as he leaves Downing Street, in London, UK, July 8, 2020. © Hannah McKay, REUTERS
Text by: NEWS WIRES
8 min

The UK government on Wednesday committed £30 billion ($37 billion, 33 billion euros) to saving jobs and helping the young find work in an economy ravaged by the coronavirus pandemic.

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Delivering a mini-budget to parliament, finance minister Rishi Sunak announced bonuses to companies retaining staff and taking on apprentices, investment in eco-friendly jobs and even allowing Britons to enjoy discounted meals in some restaurants.  

"People need to know that although hardship lies ahead, no-one will be left without hope," Chancellor of the Exchequer Sunak said.

Noting that "people are anxious about losing their jobs, about unemployment rising", Sunak said: "We're not just going to accept this." 

The budget pledges £1,000 for firms to take on trainees, and £2 billion to subsidise placements for 16-to-24-year-olds from lower income families.

But Sunak insisted that the government's furlough scheme already in operation to protect millions of private-sector jobs had to end in October as planned.           

18 years of growth

Britain has suffered Europe's deadliest virus outbreak, with nearly 45,000 deaths, and the worst economic downturn among the G7 leading industrialised states.

Sunak -- a 40-year-old former Goldman Sachs analyst just five months into the second-most powerful job in government -- said the UK economy had contracted by 25 percent from one of Europe's longest lockdowns, "the same amount it grew in the previous 18 years".

The chancellor also confirmed £3 billion of green investment.

The package includes £2 billion in grants for households to insulate homes and make them more energy efficient, and £1 billion for public sector buildings, including hospitals.

The plan is part of Britain's long-term pledge to reduce carbon emissions to net zero by 2050.

Greenpeace UK called the new money an "important start", but noted that it was "dwarfed by green recovery commitments in Germany and France".

Britain is in the final stages of rolling back nationwide coronavirus restrictions imposed on March 23, starting with the hospitality and tourism industries.

Since the crisis began, the Bank of England has pumped cash stimulus worth £300 billion into Britain's economy and slashed its main interest rate to a record-low 0.1 percent.

Experts estimate the total cost of government emergency measures could run as high as £300 billion.

Not enough?

The crisis has forced Prime Minister Boris Johnson to make spending commitments usually favoured by the left-leaning Labour party rather than his own Conservatives.

But Labour's finance spokeswoman Anneliese Dodds said the economy would be stronger had Johnson made fewer mistakes fighting the outbreak.

"The best the government can do to boost demand is to give consumers and workers the confidence and psychological security that they can go out to work, to shop, and to socialise in safety," Dodds said in her official response.

The head of Britain's CBI business lobby said the job retention plan will help some workers.

"But with nearly 70 percent of firms running low on cash... more immediate direct support for firms, from grants to further business rates relief, is still urgently needed," Carolyn Fairbairn said.

The government is paying up to 80 percent of salaries for some nine million workers under a furlough scheme that will start being wound down at the end of August.

Sunak on Wednesday said the furlough scheme "cannot and should not go on forever". 

"I know that when furlough ends it will be a difficult moment... But the truth is, calling for endless extensions to the furlough is just as irresponsible as it would have been, back in June, to end the scheme overnight.

"We have to be honest," he said.

(AFP)

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