Rishi Sunak Starts a Long Walk Along a Dangerous Cliff Edge

(Bloomberg) -- The U.K. is one of the first countries in Europe to start withdrawing the emergency measures it extended to help the economy through the coronavirus, a move that could imperil millions of jobs.

Chancellor of the Exchequer Rishi Sunak this week ended a subsidy program aimed at helping the restaurant industry. A ban on evicting residential tenants in rent arrears is set to expire on Sept. 20.

Over coming months, the government will have to decide whether to end -- or extend -- other measures that saw the government lend money to business or pay a portion of workers’ wages.

So far, the U.K. government has insisted it will stick to its deadlines, an approach that marks it out from much the rest of Europe. Germany has pledged to extend its furlough program into next year as the crisis drags on. But if he withdraws support too soon, Sunak risks a surge in unemployment.

Here’s a look at some of his key diary dates in coming months:

Sept. 30: Last loans

The last day to apply for a Coronavirus Business Interruption Loan. So far, the government’s loan programs have paid out more than 50 billion pounds ($66 billion), and the Covid Corporate Financing Facility -- a commercial-paper fund managed by the Bank of England -- holds roughly a further 17.5 billion pounds of larger companies’ debt. Firms won’t have to start repaying the loans yet, but the programs will stop accepting new applications, starting with CBILs.

Oct. 1: Furlough winds down

Businesses will have to start paying 20% of the wages of furloughed employees. Almost 10 million jobs have been supported by the program.

Oct. 15-16: Brexit

European Union leaders meet, in theory, to approve a post-Brexit trade deal with Britain. Failure to reach an accord could deliver a shock to markets and a blow to thousands of businesses.

Oct. 20:

Last day to apply for a Coronavirus Large Business Interruption Loan.

Oct. 31: The Big One

The furlough program expires, leaving thousands of firms facing big decisions about whether to fire their workers. Think tanks estimate as many as three million people will still be on furlough by this point, spurring fears of a wave of unemployment.

Many mortgage borrowers will also face the end of their payment holiday. The Standard Life Foundation say that of the 3.7 million households relying on mortgage holidays and other bill deferrals, more than half are already facing financial difficulties.

Nov. 4: Bounceback loans

Last day for small companies to apply for a 50,000-pound bounceback loan.

Dec. 31: Brexit (again)

The end of the post-Brexit transition period, another watershed moment for the U.K., albeit not one connected to the pandemic. If the EU and U.K. haven’t agreed a trade deal by now, Britain will default to trading with the bloc on terms set by the World Trade Organization. Businesses will have grapple with tariffs, quotas, additional paperwork and disruption.

Jan. 12, 2021: Last orders

The temporary value-added tax cut for the hospitality industry comes to an end. Under the measure, VAT paid on food and drink consumed inside restaurants and other businesses was cut to 5% from 20%.

March 31, 2021:

The VAT man calls

The deadline for companies to pay the VAT bills due between March and June 2020 that the government allowed them to defer to help ease the pressure on their cash flow during the early days of the the pandemic. Almost 28 billion pounds of tax payments will come due.

Stamp duty holiday ends

Another popular measure from the summer saw Sunak temporarily waive a levy on the first 500,000 pounds of any property purchase, saving buyers as much as 15,000 pounds. That’s helped revive a property market that was shuttered during lockdown -- but some economists now warn the end of the holiday may cause a sharp fall in activity and prices.

©2020 Bloomberg L.P.