Sunak extends furlough pay for workers until September

Bloomberg

Rishi Sunak will extend furlough payments to UK workers until the end of September, protecting millions of people whose jobs were suspended during the coronavirus pandemic until after restrictions are set to be lifted.
With the nation mired in a third lockdown, the government will keep paying 80% of wages for those in the program through the end of June, the Treasury said in a statement. That allowance will decline over the following three months. Assistance to the self-employed will be extended with more people eligible.
“It’s only right that we
continue to help business and individuals through the challenging months ahead and beyond,” the chancellor of the exchequer said in a statement.
Paul Johnson from the Institute for Fiscal Studies called the furlough extension “relatively generous” but said the plan does “reduce its generosity,” with employers having to contribute to salaries of staff unable to work from July. “The key thing now is that this really does end in September because we really do need to move back to normal,” Johnson told Talk Radio on Wednesday.
The furlough plan is one of the most eye-catching pieces of Sunak’s annual budget statement and answers pleas from business groups and unions for further support while vast parts of the economy are closed. It will help prevent a surge in unemployment and add to more than $420 billion the UK has spent fighting the pandemic amid the worst slump in three centuries.
His decision on the furlough highlights the balance the Treasury is seeking to maintain in the budget. Sunak has stressed the need to rein in the deficit, which is creeping towards a peacetime record of 400 billion pounds this year. At the same time, he wants to limit damage to the economy from the pandemic to avoid a wave of joblessness and a
sluggish recovery.
The Labour opposition said Sunak should have moved sooner on furlough and blamed the austerity under the Conservatives for weakening economy before the virus struck.
Sunak’s unprecedented largess with workers has made him one of the most popular members of the cabinet.
Financial markets have started focusing on the reopening, driving yields on 10-year government bonds higher than they were before the crisis began. That may embolden Sunak to set out in more detail how he’ll repair public finances once the crisis is passed.
While the national debt has risen past a record 2 trillion pounds, historically low interest rates means the cost of servicing it is low. That gives the chancellor breathing space, although he’ll also have an eye on the next general election due in 2024.
The Treasury said he’d outline a three-point plan aimed at continuing Covid support, fixing the public finances and building a future economy.
Because of Covid social-distancing rules, he won’t pose beforehand for the traditional photograph with his team outside his offices at 11 Downing Street. And as a teetotaler, he won’t indulge in a tipple at the dispatch box, a special privilege afforded to chancellors on budget day.