LONDON: British finance minister Rishi Sunak will announce on Wednesday (Jul 8) his next moves to prevent a wave of job cuts from snowballing into a full-blown unemployment crisis in the world’s sixth-biggest economy.
Sunak is already on course to take Britain’s borrowing to World War II levels as he subsidises 9 million jobs – equivalent to more than a third of private-sector employees – alongside other emergency measures.
The 40 year-old former Goldman Sachs analyst, who only became finance minister in February, has won plaudits for setting aside the pro-market instincts of his Conservative Party and putting the state at the heart of Britain’s COVID-19 response.
Now, with a string of companies announcing redundancies – from the publisher of the Daily Mirror to Rolls Royce – he is facing calls to do more, including cuts to employers’ social security contributions.
Sunak’s announcement in parliament – expected around 11.30am GMT (7.30pm, Singapore time) – will include a £2 billion fund to create six-month work placement jobs for unemployed 16- to 24 year-olds and the largest ever rise in partly government-funded apprenticeships.
“Young people bear the brunt of most economic crises, but they are at particular risk this time because they work in the sectors disproportionately hit by the pandemic,” Sunak said.
The Resolution Foundation think-tank estimated the programme could help up to 300,000 young people into work.
Sunak has said he will separately spend £3 billion to improve the energy efficiency of homes and public buildings which would support more than 100,000 jobs.
He is reportedly considering a cut to value-added tax or giving away vouchers to boost spending at pubs, restaurants and other hospitality firms which employ 2.4 million people but are struggling to cope with social distancing rules.
Sunak is also expected to cut property purchase taxes which could jump-start the housing market.
Britain’s economy shrank by 25 per cent over March and April and there has been limited recovery for the hardest-hit sectors.
Three weeks after the end of lockdown in most of the United Kingdom, the number of shoppers visiting retailers is still down by nearly 50 per cent from a year ago.
Spending on hospitality and entertainment was also down by almost half compared with last year when pubs and restaurants reopened this weekend for the first time since March.
Britain’s economy looks set to shrink by more than 10 per cent this year, the International Monetary Fund predicted in June, worse than the United States and Germany although a less severe contraction than in some other European countries.
But Sunak also has to contend with a possible Brexit shock at the end of this year as London and Brussels continue to tangle over a trade deal.
In the face of so much uncertainty, Sunak has resisted calls to announce a full budget statement now, meaning he might reserve most of his fiscal firepower until the autumn.