October 28, 2020

Britain Introduces a Scaled-Back Wage Support Plan

“This is less generous by some way than the main furlough scheme,” and a natural change as social restrictions are less severe, said Carl Emmerson, the deputy director of the Institute for Fiscal Studies.

Mr. Sunak’s statement on Thursday was even more downbeat than his last major speech in the House of Commons, in early July, when he said Britain was entering the second phase of its economic response to the virus and the government announced a meal discount program for the summer, which proved to be exceedingly popular.

“I know people are anxious, and afraid, and exhausted, at the prospect of further restrictions on our economic and social freedoms,” Mr. Sunak said. He added that “the resurgence of the virus, and the measures we need to take in response, pose a threat to this fragile economic recovery.”

Late on Wednesday, the Treasury said it would scrap the introduction of a budget in November, which would have offered a long-term plan for the economic recovery. Instead it announced the short-term measures, which also included cuts to the value-added tax, a kind of sales tax, for the hospitality and tourism industries, and extensions to government-backed loan programs to businesses and grants for the self-employed. They come just days after the prime minister, Boris Johnson, gave a national TV address in which he set new social restrictions, on top of local lockdowns, that he warned could last for months.

The Treasury had been under increasing pressure to announce a successor to the furlough scheme after the prime minister said the country had reached a “perilous turning point” earlier this week, and opposition lawmakers had pointed to the fact that both Germany and France had already extended their furlough programs.

About a month ago, Germany’s governing coalition said employees placed on furlough or working reduced hours would be able to receive partial reimbursement for lost income until the end of 2021, beyond the program’s normal one-year limit. Under the Kurzarbeit plan, the government pays 60 percent of the wages for the hours not worked, with that percentage increasing to 80 percent if hours are reduced for more than seven months.

Article source: https://www.nytimes.com/2020/09/24/business/britain-workers-unemployment-pandemic.html

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