Today’s ‘Economic Update’ by the Chancellor, Rishi Sunak, arrived six months and a day after the Prime Minister announced the start of lockdown on 23 March. Twelve days earlier the Chancellor had made his Budget debut, announcing a “temporary, timely and targeted” package of measures to “deal with the coronavirus”. Their estimated total cost was £12 billion.
That figure now looks like small change in terms of the cost of the pandemic so far.
The latest statement from the Chancellor will increase this year’s borrowing further. However, the consensus among economists is that for now, life support for UK plc trumps any consideration of public debt levels. Today Mr Sunak has divided that support into three main areas:
- Loan arrangements
What are the highlights of the Winter Economy Plan?
- A new Job Support Scheme, primarily targeted at small and medium employers, will be introduced covering employees who work at least one third of their normal hours
- The Chancellor confirmed that the furlough scheme will end on 31 October.
- The Self-Employment Income Support Scheme (SEISS) will be extended to April 2021, with a revised basis.
- The closure date for the four existing business loan schemes will be extended to the end of November.
- Repayment terms for the Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loans (BBLS) will be relaxed, with the maximum term extended to 10 years.
- The reduction in VAT to 5% for the hospitality and tourism industries will be extended to 31 March 2021.
- The deferred VAT and self-assessment payments due early next year can be repayable in instalments rather than as a lump sum.
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