The U.K.’s Chancellor of the Exchequer Rishi Sunak is setting out his plan to rescue millions of jobs and businesses from a winter crisis as the coronavirus pandemic again threatens to derail the British economy.
In an emergency statement to Parliament, Britain’s finance minister began outlining his blueprint, which is likely to include subsidizing wages for workers who return to their jobs part time and offering loans to companies hit by COVID-19 restrictions.
Sunak scrapped his plan for a full-scale budget in a sign of the disruption and uncertainty the resurgent virus threatens to bring to the country. Prime Minister Boris Johnson imposed fresh curbs on the public earlier this week and warned further measures may be needed in what is likely to be six difficult months ahead.
For businesses such as pubs and restaurants — which are required to close at 10 p.m. from Thursday night — the need for extra help from the state is urgent, with millions of workers at risk of losing their livelihoods if the crisis worsens.
The chancellor said on Twitter that the package of measures he is announcing would “continue protecting jobs through the winter.”
The options Sunak was considering included a German-style “short hours” program to top up the pay of workers who return to their jobs part-time. It was proposed as a replacement for the furlough program, which has paid more than 9 million workers up to 80 percent of their wages at a cost to the Treasury of more than £39 billion so far.
Under the plans, employers would pay staff for the hours worked, and the cost of the remaining hours not worked would be split between workers, employers and the government, people familiar with the discussions said. Separate help could be available for companies most severely affected by the restrictions, they said.
Sunak’s measures aim to prevent a gradual increase in job losses from snowballing into a crisis comparable to Margaret Thatcher’s time as premier, when unemployment climbed to almost 3.3 million as the economy went through a painful overhaul. His actions will likely be followed by the Bank of England, which is widely anticipated to deploy another round of monetary stimulus as early as November.
Economists expect the latest restrictions on businesses to damage the economic rebound. If the government goes further and imposes blanket lockdown restrictions for two weeks at the start of October, output would shrink 3.9 percent in the fourth quarter, according to Bloomberg Economics.
Sunak and Johnson are trying to strike a balance between getting COVID-19 under control and keeping enough of the economy open to avoid damaging mass redundancies. The first peak of the disease earlier this year hit the U.K. with the highest death toll in Europe and the country’s deepest recession in more than a century.
Johnson’s government has faced mounting criticism over its public health response to the outbreak and is under political pressure to do more to help avoid an economic nightmare as the disease spreads rapidly again.