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Rishi Sunak only stalling ‘job losses and business closures’ as furlough scheme extends

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Mr Sunak yesterday announced the furlough scheme would be extended across the whole of the UK until the end of March. The Government will continue to pay up to 80 percent of a person’s wage up to £2,500 a month, and will review the policy in January It came as England was placed under lockdown and millions of workers, for the second time, were unable to go to work.

The Chancellor said the move intended “to give businesses security through the winter”, adding that the “security we are providing will protect millions of jobs”.

During the first lockdown, in May, 30 percent of the workforce across the UK was furloughed, this having fallen by more than half to 11 percent by August as restrictions were eased.

The scheme and other Government coronavirus responses are on track to cost the public purse £210billion for the period March to September.

It is almost a quarter of the Government’s annual budget for running the public, making welfare payments and investing in infrastructure.

While many have welcomed the furlough scheme and its extension, others have grown sceptical, claiming it will only prolong the inevitable – mass job losses and business closures – should Westminster not introduce other measures such as mass testing.

In September, as the furlough scheme’s end was near, Mark Littlewood, the director general of the Institute of Economic Affairs (IEA), told Express.co.uk that although Mr Sunak had been successful in flattening the curve of a recession, it was only a matter of time after the scheme ended that Britons would face the toughest fallout from the pandemic.

His comments reflect much of the situation the country now finds itself in as it enters its second lockdown.

Mr Littlewood explained: “I think as we emerge from lockdown it’s not necessarily then that we’re going to see the spring of impact.

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“When furlough ends, a lot of companies will turn out not to be viable and I think this coming winter is going to be very bleak indeed for the economy.

“We could see very substantial job losses and increased business closure.

“I’m not expecting an immediate bounce back.

“This looks like a much worse hit than the banking crisis of 2008 in terms of national income going down.

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“It could be as much as three times as bad as that in terms of damage done to British GDP: and it took years to recover from 2008.”

Prior to the furlough scheme being extended, Government support was in place in various parts of the country that had entered one of the three tiered restrictions.

To many, however, the new March expiry date seemed too little too late.

Some of the UK’s biggest retail companies on Wednesday announced they would be cutting jobs.

More than 7,200 will lose their jobs as Sainsbury’s, John Lewis and Clarks, as well Lloyds Banking Group.

The announcement from Sainsbury’s was a particular shock as it said it planned to cut at least 3,000 jobs by the following day within its Argos chains, as well as on deli and fresh fish and meat counters in stores.

In addition to lengthening the scheme, Mr Sunak also announced billions of pounds of support for other aspects of the economy.

This included more money for self-employed people; with the Self-Employment Income Support Scheme (SEISS) now increased up to a maximum of £7,500.

Earlier this year, the UK’s economy took a huge hit after the country was placed under full lockdown.

Things brightened as financial sectors opened up in June when cash was pumped back into the system.

It resulted in a short, sharp spike in economic recovery.

In July, for example, Britain’s economy grew by 6.6 percent – the third month in a row the economy expanded.

Yet, as the Office of National Statistics (ONS) explained, the UK had still “only recovered just over half of the lost output caused by the coronavirus”.

The economy is still considerably smaller than it was pre-pandemic; still around 11 per cent smaller than February.

This figure is expected to plunge further as businesses around England are forced to shut until December.

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