Sunak Sees Less Need for Consumer Support as U.K. Exits Lockdown
(Bloomberg) -- Chancellor of the Exchequer Rishi Sunak suggested he’ll do less to spur consumption as the U.K. emerges from its third coronavirus lockdown than he did after the first shutdown last year.
Sunak also said work patterns are likely to change in the wake of the pandemic, with a more “hybrid” approach as people split working time between home and office. That may hit transport operators and other businesses reliant on consumers, he said Friday in an interview hosted by iNHouse Communications.
The remarks indicate shops and restaurants won’t see the same level of Treasury largess as last summer, when it cut taxes and splurged 849 million pounds ($1.2 billion) on subsidized restaurant meals to persuade consumers to overcome their anxieties about Covid-19 and return to high streets.
“Last year we were worried about whether once things reopened people would get out there and spend,” Sunak said. This year, “there’s probably less role really for government to encourage or incentivize that,” he said, because U.K. and international experience showed that “once you reopen things it seems that people will get out there and do what they do best, which is, go have fun.”
The meal subsidies came under Sunak’s Eat Out to Help Out program that critics have since said helped to spread coronavirus -- a charge the chancellor and the hospitality industry have rejected. Sunak’s comments suggest there won’t be a repeat of that program, though other measures rolled out last year -- including reduced sales taxes for accommodation, attractions and food served in hospitality venues -- have already been extended until Sept. 30.
Sunak pointed to “pent-up savings” and said: “I think people will feel that when they can they will want to do their bit to go and support the businesses that they love, in their in their towns and villages.”
But the chancellor expressed some concern about the likelihood that people will work more from home after the pandemic.
“The challenge is, even small changes will have quite significant impacts,” he said. “It only takes people to work a day a week from home, that’s quite a big impact on the Tube, on commuting, on businesses that were used to that.”
Sunak said companies wanting to hire “great talent” will have to recognize that workers will want both to interact with colleagues in an office and some flexibility to work from home. Workers may “vote with their feet” and quit if employers close offices and force them to work from home, he warned.
“I’m probably in the camp of saying that it’s good that people are in offices together,” he said. “You can’t beat the spontaneity, the team building, the culture that you create in a firm or an organization for people actually spending physical time together.”
Sunak also said:
- the government intends to review the differing levels of alcohol duty
- U.K. is in a “constructive dialog” with the EU on vaccines
- the economy is “on track” to re-open on the schedule laid out by Boris Johnson last month
- he’s hoping for an investment-led recovery after the pandemic
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