UK's Sunak to offer lifeline to furloughed workers

LONDON: British finance minister Rishi Sunak will announce new plans to support jobs on Thursday, as fears mount of a surge in unemployment when an existing 52 billion pound ($66 billion) support programme comes to an end in just over a month.

Sunak has ruled out a wholesale extension of the Coronavirus Job Retention Scheme, which supported 8.9 million private-sector jobs at its peak in May, but a growing second wave of COVID-19 cases has piled pressure on him to announce a replacement.

"As our response to coronavirus adapts, tomorrow afternoon I will update the House of Commons on our plans to continue protecting jobs through the winter," Sunak said in an unexpected statement on Wednesday.

A finance ministry source said Sunak would not be holding a full budget before the end of the year, as previously planned, due to the economic uncertainty created by rising COVID cases, which this week showed their biggest daily increase since May.

On Tuesday, the government dealt a blow to the hospitality sector by ordering bars and restaurants to shut by 10 p.m., halving the maximum number of people allowed at weddings and backtracking on calls for employees to return to offices, rather than working from home.

Curbs on socialising were likely to last another six months, Prime Minister Boris Johnson warned in a national address.

The BBC reported that Sunak would announce more financial help for people and businesses where jobs were at risk, probably through the form of wage subsidies for staff who return part-time, but would not target help at specific sectors.

Sunak has previously said he would be "creative" in finding a way to support jobs, and foreign minister Dominic Raab told Sky News earlier in the day that the government was looking at a range of measures but would not extend the existing scheme.

MILLIONS RECEIVING SUPPORT

The most recent official figures show around 5 million people were still relying on the job support programme for some or all of their income at the end of July, concentrated in the hospitality and entertainment sectors.

The Bank of England forecast last month that Britain's unemployment rate would jump to 7.5% by the end of the year if there were no replacement for the scheme, up from 4.1% in the three months to July.

Business leaders, trade unions and the opposition Labour Party have all urged the government to continue support in some form and avoid a cliff-edge end to assistance.

Britain's furlough scheme, which paid up to 80% of employees' wages for staff who are not working, is due to expire on Oct. 31, sooner than similar programmes in other countries.

The Confederation of British Industry has called for Sunak to adopt a programme similar to Germany's 'Kurzarbeit' programme which tops up the wages of staff whose hours are reduced, and which came to prominence during the 2008-09 crisis.

Employers would cover the full wage bill for the hours staff worked, which would need to be at least half their normal hours. But the government would pay a third of the wage for hours not worked, while employers would also cover a third.

Jonathan Portes, professor of economics at King's College London and a former chief economist at Britain's Department for Work and Pensions, said this approach made sense for sectors such as hospitality that were operating below capacity.

But for sectors that looked set to stay closed - such as theatres and sporting venues - other assistance would be needed to ease furloughed staff into new jobs, he said.