U.K. Government Pays Wages for 10 Million Jobs Amid Pandemic

(Bloomberg) --

The U.K. government is paying the wages for about 10 million jobs as the coronavirus pandemic shuts down swathes of the nation’s economy.

The support forms part of a package that has so far totaled almost 40 billion pounds ($49 billion), according to new figures published Tuesday. The announcement came on the day the U.K. reported claims for jobless benefits spiked the most on record in April.

About 8 million jobs have been furloughed under the Treasury wage-subsidy plan, while another 2 million self-employed workers are also claiming support. That’s come at a cost of more than 17 billion pounds, while various loans programs have paid out in excess of 22 billion pounds.

PlanUsageCost (Pounds)
Coronavirus Job Retention Scheme8 million jobs11.1 billion
Self-employment Income Support2 million claims6.1 billion
Bounce Back Loan Scheme464,393 loans14.18 billion
Coronavirus Business Interruption Loan Scheme40,564 loans7.25 billion
Coronavirus Large Business Interruption Loan Scheme86 loans0.59 billion

The spending may fuel the debate over how Chancellor of the ExchequerRishi Sunak pays for the extra borrowing needed to fund the support. A study by the Institute for Public Policy Research Tuesday found that the nation’s debt-to-GDP ratio could reach 120% if the lockdown lasts three months.

Still, with borrowing costs historically low thanks to Bank of England stimulus, the IPPR said even a doubling of the U.K.’s debt would still leave the Treasury paying less to service as a share of tax receipts, than at almost any time since 1950.

Meanwhile, the Treasury announced Tuesday it has extended the maximum loan size available through the Coronavirus Large Business Interruption Loan Scheme to 200 million pounds -- a fourfold increase from the previous level.

Firms borrowing more than the original 50 million pounds will be subject to restrictions on dividend payments, senior pay, bonuses and share buy-backs for the duration of the loan, the Treasury said.

©2020 Bloomberg L.P.

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