A summary of the “unprecedented” fiscal package announced on Friday 20 March amid a deepening financial crisis.
On Wednesday I wrote about the latest measures announced including the £330bn in government backed loans for struggling businesses and the potential pitfalls this had on already struggling industries. Now, I’m not going to take all the credit, but on Friday Rishi Sunak, Chancellor to the Exchequer, announced an impressive aid package as we saw the country’s shutdown accelerated.
The UK is the first government to introduce such radical measures to ensure the country’s businesses are protected as far as possible. Following the Prime Minister’s announcement that the all pubs, clubs, cafés and restaurants will close across the UK as of Friday night, Mr Sunak announced that the government would step up and pay people’s salary.
The new Coronavirus Job Retention Scheme will ensure that all those employees who are furloughed and retained on payroll rather than being made redundant, will receive up to 80% of their salary (up to £2,500 a month). This is initially for the following three months, with the possibility of an extension if necessary and will be backdated to 1 March 2020.
No limit was placed on the amount of funding available for this scheme, however the Financial Times has estimated that the cost would be £3.5bn per 1m people for each of the three months with up to 3m people working in those sectors heavily affected. Mr Sunak said he expected the first grants to be paid within weeks and the scheme to be fully up and running by the end of April.
The Chancellor went further, extending the interest free period of the Coronavirus Business Interruption Loan Scheme from 6 months to 12 months as well as deferring all VAT payments until the end of June to further assist business’s cash flow.
Mr Sunak ended with this statement, and whilst it is not related to financial policies, it is something we should all be thinking of in this midst of this crisis:
“When this is over, and it will be over, we want to look back at this moment and remember the many small acts of kindness done to us and by us . . . how we thought first of others and acted with decency. . . . In the face of a generation-defining moment, we undertook a collective national effort and we stood together
It’s on all of us”