Budget cancelled as Rishi Sunak prepares to unveil new business support package
Rishi Sunak has cancelled his planned autumn Budget and will instead announce a new package of emergency support for UK businesses in a bid to stop mass unemployment.
Sunak was supposed to unveil his second budget this year within the next few weeks, with the chancellor preparing the country for the next stage of its economic recovery.
However, the chancellor will instead make a statement tomorrow to the House of Commons to announce what he has dubbed his “winter economy plan”.
Calls have grown from the UK’s most prominent business groups and opposition MPs to extend the government’s wage subsidy scheme, which is due to end next month, or replace it with a similar programme.
Experts are predicting mass unemployment if the scheme ends without any new support for companies that still cannot operate at capacity under the government’s coronavirus restrictions.
Boris Johnson’s announcement yesterday that stringent new restrictions would be in place for six months appears to have convinced the chancellor about the need for immediate action to protect jobs.
Johnson told MPs today that “of course the government is going to come forward with further measures”, but that he and Sunak would not extend the furlough scheme.
“I don’t think it would be sensible to just extend the furlough scheme in its existing form beyond the end of October, but we will do everything we can to support business, to support those in jobs and indeed the self employed,” he said.
He added: “We will go forward with further creative and imaginative schemes to keep our economy moving.”
The Prime Minister announced a raft of stringent new measures yesterday, including a 10pm curfew for all hospitality venues, enforced table service at hospitality venues and requirements that all retail and hospitality workers wear face masks at all times.
The new measures are expected to severely hamper the country’s economic recovery, particularly in the hospitality sector.
There was speculation this morning that Sunak was considering copying the German wage subsidy scheme, which sees the government pay for employees returning to part-time work.
Under the scheme, companies would pay employees’ wages for the time they are at work.
The government would then cover the wages for the time when the company has no work for the employee.
Labour shadow chancellor Anneliese Dodds called for a similar scheme in her party conference speech on Monday.
“Our Job Recovery Scheme would enable businesses in key sectors to bring staff back to work, on reduced hours, with government backing wages for the rest of the week,” she said.
“The scheme would incentivise targeted businesses to bring back more workers part-time, instead of bringing some back full time, and letting others go.”
The CBI has suggested that Sunak subsidises firms if they could offer workers 50 per cent of their normal hours, while Frances O’Grady, general secretary of the Trades Union Congress (TUC), said: “It’s clear that this pandemic will not be over by Christmas – so neither should state support for jobs.”