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  • Writer's pictureAccountant High Wycombe

Post Corona Era: UK Presents € 33 Billion Stimulus Package

A return to work bonus, a reduction in VAT on leisure activities and the elimination of a tax on real estate transactions have been announced.

UK € 33 Billion Stimulus Package

Rishi Sunak, the British Chancellor of the Exchequer, presented Wednesday, July 8 a major recovery plan, the bill of which will amount to "up to 30 billion pounds" (33 billion euros). Return-to-work bonus, reduction in VAT for six months on hotels, bars and restaurants, help with the insulation of houses, tax gift on real estate purchases, system of discounts for all in restaurants, etc. want very concrete and almost immediate, most expiring in early 2021.

The UK is one of the economies hardest hit by the lockdown, which has taken longer than elsewhere. England only reopened its pubs and restaurants on Saturday July 4, while Scotland and Wales have yet to do so. The recession will be around 10% (- 0.2% according to the IMF, - 11.5% according to the OECD), among the worst countries with France, Italy and Spain.

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The British government reacted by presenting one of the most interventionist aid plans in the world, with total measures equivalent to 25% of GDP even before the plan of Wednesday, July 8, according to calculations by BNP Paribas (against 47% in Germany, 21% in France and 15% in Spain). The first step was to keep the economy afloat during lockdown, by creating a short-time working system and increasing cash payments to businesses. On Wednesday, Mr. Sunak unveiled a second step that has a priority: maintaining employment. A third stage, devoted to rebuilding the economy, will be presented later, probably in the fall.

End of partial unemployment in October

"I will never accept that unemployment is inevitable," Sunak explained to a half-empty House of Commons over social distancing. For this, he confirms - and this is no small paradox - the end of the partial unemployment system in October.

UK government to offer companies a bonus of £ 1,000 per employee to take over before the end of January

This system, which did not exist in the UK before the pandemic and covers 80% of salary, is currently used by 9.4 million people. "But the truth is that asking for its permanent extension would be irresponsible," continues the Chancellor. (…) This would give false hope to people who will think that they will be able to return to their jobs. And the longer people are on short-time work, the more likely they are to lose their skills and the harder it will be to find a new chance elsewhere. "

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