UK government unveils fresh US$37 billion package to stimulate economy

Britain’s Chancellor of the Exchequer Rishi Sunak speaks during question period to the Chancellor of the Exchequer in London, Britain, on Jul 7, 2020.

 

LONDON: The UK government on Wednesday (Jul 8) unveiled a package worth £30 billion (US$37 billion, €33 billion) to save jobs and help the young into work to kickstart the coronavirus-hit economy.

Delivering a mini-budget to parliament, Chancellor of the Exchequer Rishi Sunak’s measures included bonuses to companies retaining staff and taking on apprentices, investment in ‘green’ jobs and allowing the whole country to enjoy discounted meals in restaurants.

“People need to know that although hardship lies ahead, noone will be left without hope,” said Sunak.

Noting that “people are anxious about losing their jobs, about unemployment rising”, Sunak told the country:

“We’re not just going to accept this.”

Other measures included a temporary cut to the level of value added tax on food, accommodation and attractions – and lifting the threshold at which stamp duty tax is due on home purchases to help the construction sector.

Britain has suffered Europe’s deadliest outbreak of COVID-19 and a nationwide shutdown led to the worst economic contraction among the G7 leading industrialised states.

Sunak said the UK economy had contracted by 25 per cent over the coronavirus lockdown – “the same amount it grew in the previous 18 years”.

The chancellor also confirmed £3-billion of green investment, after British Prime Minister Boris Johnson vowed to “build, build, build” out of the economic crisis.

The investment package includes £2 billion in grants for households to insulate homes and make them more energy efficient, and another £1 billion for public sector buildings, including hospitals.

The plan is part also of Britain’s long-term pledge to reduce carbon emissions to net zero by 2050 to tackle climate change.

Britain imposed a nationwide lockdown on Mar 23 to halt the spread of COVID-19 but has gradually begun easing restrictions in the hope of boosting ailing businesses.

Recent official data showed that the UK’s biggest quarterly contraction for more than 40 years – at minus 2.2 per cent – in the January-March period.

However, the data included only the first full week of the lockdown and economists expect subsequent damage to be considerably worse for the second quarter.

Another contraction would place Britain in a technical recession.

Since the crisis began, the Bank of England has pumped cash stimulus worth £300 billion into Britain’s virus-hit economy and slashed its main interest rate to a record-low 0.1 percent – moves aimed at propping up businesses and saving jobs.

Experts estimate the total cost of state emergency measures meanwhile could run as high as £300 billion.

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