Chancellor Rishi Sunak has extended the government’s job protection scheme in full for a further four months.

Speaking in th House of Commons, Sunak said that the scheme would continue paying workers’ wages at the current rate of 80% until the end of October to avoid large-scale redundancies and soaring unemployment.

Earlier today, the ex-governor of The Bank of England urged the Chancellor to retain the scheme in full until the economy recovers from the effects of the Covid-19 pandemic.

“I don’t think it makes sense to regard this as the major cost of the Covid-19 crisis in economic terms,” said King.

“These payments under government schemes are transfers from taxpayers in general to businesses, it will lead to an increase in national debt [but] we can finance that over a long period, particularly given the very low level of long-term real interest rates.”

He said the ‘real cost’ of the pandemic would be in lost jobs and output rather than direct cost to the public purse.

“The real cost of this shutdown is not measured by the impact on the public finances but by the lost incomes and outputs in the economy, a cost which is likely to end up as an order of magnitude of several hundred billion pounds. That’s an enormous cost,” he said.

Date published: May 12, 2020

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