Another coronavirus stimulus package of £30 billion ($37.6 billion) was announced by the United Kingdom with the aim of stopping the growing job crisis in the country and to prop up the economy of its worst recession in centuries.
The most “urgent challenge” the UK economy faces was significant job losses, said UK finance minister Rishi Sunak speaking in parliament on Wednesday. He also announced a slew of measures related to tax breaks, restaurant discounts and jobs programs aimed at increasing employment in the economy in preparation of the government set to withdrawing the wage subsidies program in October.
The British economy is in its worst recession in more than 300 years because of the novel coronavirus pandemic and it has been predicted by the Bank of England that the economy will shrink by 14% this year. Another economic sword of sorts dangling over it is the pending new trade deal with the European Union, its biggest export market, which need to be signed in six months time.
According to Paul Dales, chief UK economist at Capital Economics, the latest coronavirus package announced by the UK government is roughly about £166 billion ($208 billion) or about 7.4 per cent of the 2019 GDP of the country.
Even though Dales does not see a recovery in the UK economy prior to 2022, he said that with the latest direct fiscal support for the UK economy, it I snow comparable to those announced by Germany (7.3 per cent of 2019 GDP), Japan (7.5 per cent) and the United States (8.4 per cent). It was more than that of France and Italy (both at 4.5 per cent).
Dales added that no one can accuse Sunak of “penny pinching”.
“Businesses will get a £1,000 ($1,255) bonus for each employee they bring back from furlough, costing the government up to £9 billion ($11.3 billion) if employers bring back all 9 million workers enrolled in the wage support program,” Sunak said.
More than 80,000 job cuts have already been announced by major companies of the UK while many more job losses are expected after the end of the jobs retention program, which has posed a serious joblessness issue for the country.
According to the Office for National Statistics, the number of people applying for jobless claims reached 2.8 million in May which was more than twice the number reported in March.
According to the Organization for Economic Cooperation and Development, the rate of unemployment in the UK could rise to as high as 15 per cent in the fourth quarter in the case of a second wave of the pandemic even though currently the unemployment rate is low. The Paris-based agency said earlier this month that it expects the unemployment rate to touch almost 10 per cent by the year end even without a second outbreak of Covid-09.
“Furlough has been a lifeline for millions but it cannot and should not go on forever,” Sunak said Wednesday, adding that it will be wound down “flexibly and gradually.” A total of £1.6 billion ($2 billion) will be invested in training, apprenticeships and scaling up employment support measures, including doubling the number of work coaches to 27,000, Sunak said.
(Adapted form CNN.com)