Rishi Sunak scrapped his fall budget plan and will announce new measures on Thursday to end job losses and business bankruptcies on Thursday amid government fears that a second Covid-19 wave threatens Britain with double-dip recession
The Chancellor decided that long-term decisions that would have featured in the annual landmark event should be put aside so that the Treasury can focus on preventing a short-term economic crisis
With signs that the summer growth spurt proved to be short-lived, Sunak will use his statement to MPs to announce an expansion of business loan programs and a package of job supports to replace the government leave program, which is due to end soon month
Setting the stage for a Commons update, the Chancellor said he would announce details of a « winter economy plan » that « would continue to protect jobs » as Britain enters a new phase of the pandemic
It comes as pressure increases on the Chancellor to act after Boris Johnson announced new restrictions on business and social life earlier this week
“Nobody wanted to be in this situation, but we have to respond to it,” said a Treasury source “The Chancellor has shown he has been creative in the past and we hope people will trust us to continue in this vein Giving comfort people and businesses the help they need to overcome this is paramount in her mind «
Amid mounting job losses and deteriorating growth prospects, business groups, unions and unions have said Sunak urgently needs to give up ending the leave, or at least replace the employment program with a successor program
Labor leader Keir Starmer said the country needed a Plan B for the economy and had offered to help Boris Johnson come up with one, adding: ‘It has no sense of introducing new restrictions at the same time as a phasing out of support for jobs and businesses «
In a televised response to the Prime Minister’s speech to the nation, Starmer said: « It’s a huge gap This is a huge mistake And it could lead to a wave of job losses this winter We need to ‘a national effort to protect jobs and avoid a second lockdown… I offered to work with the Prime Minister to do whatever we can to save lives and livelihoods «
The Guardian revealed on Tuesday that one of the options Sunak is considering to replace the leave program is a package of wage subsidies for short-time employees of the type already in place in Germany Sunak, however, will say his plans are tailor-made to meet the UK’s current needs rather than a direct lift from another country
Dropping the broadest possible indication that a successor holiday program was in the late stages of development, Johnson told MPs on Wednesday the government « will continue to raise arms around the people of this country »
« We will move forward with other creative and imaginative programs to keep our economy moving, » he said
Along with the flagship wage subsidy plan, another measure that forms the backbone of Sunak’s winter plan for the economy is expected to be an extension of the Treasury’s Covid loan program for businesses
Companies have borrowed over £ 57bn to date under the scheme, which is expected to close at the end of September The leave program has cost £ 39bn since its launch on April 20
Sources in Whitehall said the decision to cut the budget – which will end any immediate thinking about fixing the damage to public finances from the pandemic – was made because the public wanted to see the Chancellor focus on the « here and now »
The UK hospitality sector has reacted with concern to stricter rules for bars and restaurants, while downtown retailers fear a further blow from advising workers to do their work from home if possible
Sunak’s decision means the fall budget has been postponed for a second year, although the Office of Fiscal Responsibility continues to release updated forecasts for the economy and public finances in November According to the law , the OBR must publish two forecasts per year
Sources said there was a need to trigger contingency plans the Treasury worked on over the summer in case the economy needed additional support After collapsing 25% between February and April, the economy started growing again in May and is set to grow by at least 15% in the third quarter
More recent indicators, however, suggest that the recovery has started to lose momentum and the Chancellor fears the new Covid-19 brakes will worsen an expected sharp rise in unemployment by the end of the year Sunak will tell MPs tomorrow that his priority will be the same since the crisis began six months ago – Jobs
Although the government’s leave program has meant that the unemployment rate has only risen slowly to 41% since the start of the pandemic, the Bank of England expects a much larger increase in 75% by year end This forecast was made ahead of this week’s new restrictions announcement
Warning that risks to the economy were increasing, Andrew Bailey, the governor of the Bank, said on Tuesday that the government had to ‘stop and rethink’ the end of the holiday
Sunak has previously said there will inevitably be job losses due to the pandemic and will tell MPs that the government needs to be honest with the public about the trade-offs between keeping jobs and helping them. find new , and between aid now and reconstruction in the future
Rishi Sunak
World news – GB – Sunak budget struggles for urgent job-saving measures