The British government will on Wednesday unveil a mini-budget to kickstart economic growth after the coronavirus shutdown, with a jobs scheme for young people and investment in infrastructure among the big ticket measures.
Britain has suffered Europe’s deadliest outbreak of COVID-19 and a nationwide shutdown led to the worst economic contraction among the G7 leading industrialised states.
In a statement to parliament at 1130 GMT, finance minister Rishi Sunak will detail a £2 billion (2.2-billion-euro, $2.5 billion) jobs scheme for young people at risk of long-term unemployment.
He has also already announced £3 billion of green investment, after Prime Minister Boris Johnson vowed to “build, build, build” out of the economic crisis.
“As Britain recovers from the outbreak, it’s vital we do everything in our power to support and protect livelihoods across the nation,” Sunak said ahead of the statement.
The investment package includes £2 billion in grants for households to insulate homes and make them more energy efficient, and another £1 billion for public sector buildings, including hospitals.
The plan is part also of Britain’s long-term pledge to reduce carbon emissions to net zero by 2050 to tackle climate change.
In addition, Sunak is reportedly set to announce plans to reduce stamp duty, which is levied on real estate transactions, to boost the property market.
Yet he is not expected to alter Britain’s emergency jobs retention plan, or furloughing, under which the government pays up to 80 percent of salaries for private sector workers.
It is currently supporting more than nine million jobs, part of a series of multi-billion-pound packages to help those affected by the impact of the outbreak, but is due to end in October.
Since the global pandemic hit Britain in mid-March, more than 44,000 people confirmed to have COVID-19 have died.
Infection rates have now slowed and schools, shops and the hospitality industry are gradually reopening.
“Four months on from the outset of coronavirus, we have slowly and carefully reopened much of our economy, and we can now begin our national recovery,” Sunak told parliament Tuesday.
However, he acknowledged that “we cannot protect every single job”.
– Financial ‘hole’ –
Britain imposed a nationwide lockdown on March 23 to halt the spread of COVID-19 but has gradually begun easing restrictions in the hope of boosting ailing businesses.
Recent official data showed that the UK’s biggest quarterly contraction for more than 40 years — at minus 2.2 percent — in the January-March period.
However, the data included only the first full week of the lockdown and economists expect subsequent damage to be considerably worse for the second quarter.
Another contraction would place Britain in a technical recession.
Since the crisis began, the Bank of England has pumped cash stimulus worth £300 billion into Britain’s virus-hit economy and slashed its main interest rate to a record-low 0.1 percent — moves aimed at propping up businesses and saving jobs.
Experts estimate the total cost of state emergency measures meanwhile could run as high as £300 billion.
“As the UK begins to emerge slowly from lockdown, focus now turns to plugging the eye-popping £300 billion hole left in the UK’s finances by COVID-19,” said analyst Tom Selby at stockbroker AJ Bell.
“The chancellor will have to weigh up his desire to kickstart the economy after its slumber with the need to raise extra revenue via the tax system.”
Selby said “a strong recovery should boost tax receipts and lower the amount spent on benefits, automatically improving the government’s balance sheet.
“The chancellor may decide to front-load the ‘good news’ items on Wednesday as he attempts to kickstart the economy — and save the tax nasties for his Autumn budget,” he added.