U.K. Extends Wage Support and Business Loans to Aid Recovery
(Bloomberg) -- The U.K. government announced it will extend a package of measures aimed at helping businesses and workers through the pandemic, with support for wages and loans to firms at risk of collapse.
In a series of statements on Thursday, Chancellor of the Exchequer Rishi Sunak set out his plan to extend the business loans and furlough wage support programs, and announced he will unveil the government’s tax and spending plans at a budget on March 3.
Workers on furlough will receive 80% of their wages from the state until the end of April, a month-long extension to the policy. The loans, which have already paid out 68 billion pounds ($92 billion) in government-guaranteed lending, will be extended until the end of March. They had been due to end Jan. 31.
“We know the premium businesses place on certainty, so it is right that we enable them to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support,” Sunak said.
The chancellor is trying to support British businesses at a time of heightened uncertainty, after the pandemic pushed the economy into its deepest recession since the Great Frost of 1709. The U.K.’s planned departure from its post-Brexit transition period on Dec. 31 adds to the ongoing Covid-19 restrictions that hamper domestic trading conditions.
Extending the furlough and loan programs is the latest example of the coordinated response the Treasury and Bank of England have deployed to the crisis. Earlier Thursday, the central bank extended its own loan program to help lending to the real economy, running it an extra six months until October.
The vast scale of government borrowing has prompted questions over how and when Sunak intends to start paying off the debts. He will set out his fiscal plans in the budget on March 3. That statement “will deliver the next phase of our plan to support our recovery from coronavirus and protect jobs,” Sunak wrote on Twitter. Forecasts for the economic outlook from the Office for Budget Responsibility will be published at the same time.
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