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Summary
- Johnson has told the MPs that the government will not immediately pull the rug out.
- Financial support to companies and individuals is expected to continue at least into summer so that the difficult period while coronavirus restrictions are still in place can be effectively managed.
Rishi Sunak, finance minister, UK is all set to spend billions of pounds to keep supporting the economy over the next four months, as the ongoing lockdown threatens survival of affected firms. A recent news report from Bloomberg suggests that he will extend financial aid to individuals and businesses so that they do not face difficulties while the restrictions are still in place.
Boris Johnson, British PM told the members of Parliament on Monday that the government will not immediately pull the rug out. Government will continue to do whatever it may take to save livelihoods and jobs across the nation, he added.
The chancellor of the British exchequer will present the UK budget on 3 March after the government outlined a cautious timeline to reopen the economy yesterday on 22 February.
Lockdown to lift slowly
Johnson has announced a step-wise plan to gradually lift the ongoing set of social distancing restrictions. First, the hairdressers and shops will reopen on 12 April along with restaurants and pubs, though the last two will be allowed to open only outdoors. Next, the indoor venues would reopen on 17 May that include – cinemas, theaters, sports stadiums with limited capacity, and indoor seating at bars and restaurants. Foreign holidays will be permitted from the same day as well.
The final stage will begin on 21 June when all the legal limits of social distancing will go away. Some businesses like nightclubs will remain closed until then.
In the meantime, the government has cautioned that any of these dates could be postponed in case Covid infections and hospitalisations rise.
Public finances
Johnson’s lockdown lifting roadmap will surely influence how fast Sunak is able to withdraw the ongoing subsidies and start to push taxes to raise revenue and lower the burgeoning fiscal deficit. The British economy suffered the deepest collapse in the past three centuries during 2020.
The FM’s budget package is likely to track the lockdown exit strategy well, keeping into account the fact that many sectors may not be able to return to normal levels even when the pubs and shops are allowed to re-open in few weeks from now, insist market experts. So, the public assistance might in fact last beyond 21 June, Johnson’s tentative date to reopen the last set of industries.
Industry seeks help
It is only by mid-May that the government would allow indoor services to operate and by then many companies in the sector would have been closed for nearly 200 days. Kate Nicholl, Chief Executive Officer, UKHospitality has asked for a large financial support package for the ailing restaurants and pubs.
The Sunak’s packages due to expire this April-end are popular furlough scheme that pays for up to 80 per cent of worker wages, a business rate holiday, and lower sales tax on tourism and hospitality, apart from others.
