Britain’s Chancellor of the Exchequer – Rishi Saunak, faces one of the toughest decisions with millions dependent on his next move for their livelihood.
After announcing pay to 80% of wages of more than 8 million workers, he will be seen next week scaling back the program in interest of reducing burden his policies are adding on the public finances – where the Furlough program is expected to cost around 84 Billion Pounds. However, if he announces to end them soon it could trigger a mass unemployment wave unseen since the 1930s.
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Unemployment Worst Since the Great Depression
With both the Bank of England and the Office for Budget Responsibility expecting unemployment to rise to about 10% from 3.9% now, this would mean about 3.4 million people would lose their jobs, which has never been seen since the Great Depression. Besides Rishi Saunak declared that he will not be able to save every job, warning country of severe recession which has not been seen before.
With viruses lingering for a period longer than expected, the cost of the government’s extraordinary support is rising. U.K.’s crisis measures overall are expected to cost 123 billion pounds for current fiscal and British mortgage borrowers told on Friday, that they will allow to skip payments for three month.
With economy passing through peak virus phase, economy is still largely in lock down and on May 12, Saunak announced extending jobs program by four months until October (companies shouldering more of the cost from August onwards)
While significant companies are likely to go with what chancellor announces, sectors such as aviation, hospital and leisure may require support beyond October.
With Saunak’s next move, Boris Johnson’s government that is already in question for its response to the pandemic will likely risk the response of unemployed voters at the ballot box.