Economic Update – Andrew Moorby’s comments
The first announcements were aimed at staff retention. The schemes announced are largely temporary and are either aimed at employers bringing back furloughed employees (Job Retention Bonus) or indeed taking on extra employees, particularly those most at risk of unemployment i.e.- the young through the new Kick Start scheme.
In terms of job creation the main announcements will be made in the Autumn Budget but there was a £2bn fund created to create new jobs in the green sector by giving households vouchers to make their Homes more energy efficient and use modern green energy systems.
Other measures are aimed at those sectors particularly hard hit including an increase of the stamp duty land tax threshold to £500k helping the housing sector. There was also the 6-month reduction of vat on hospitality and tourism to 5%, and providing a 50% discount to those eating out in August (up to £10 per person). Creative but difficult to police?
In reality the major announcements, the governments third rebuilding stage, will not be made until the autumn and so until then, it feels that the announcements made are merely temporary measures to carry us through the bottom of the slow down and it certainly felt a little underwhelming given the scale of problems many face.
In addition, these announcements have also been made more than a month after the removal of the furlough scheme was announced. Many businesses have therefore progressed their redundancy strategies in that period and so for those workers, these announcements have come too late. It would have been far better if these could have been announced alongside the plans to remove furloughing.
The economy has seen a 25% contraction in the last two months matching the growth seen in the previous 18 years. If we are going to recover from this and benefit from a V shaped recovery, it is important that the government show proactive rather than reactive leadership. We all have a vital role to play. Whether it is supporting our employees or our employers or aiding those people and businesses we work with. The measures announced are trying to break the habits of lockdown and we all have a part to play in achieving this.