With the UK economy shrinking at its fastest pace since the financial crisis of 2008, the Coronavirus (Covid-19) lockdown has seen the economy decrease by 2% in the first quarter of 2020. This fall was driven by just one week of lockdown in March, so an even bigger fall is expected for quarter two.
In response to this, the Chancellor Rishi Sunak has announced plans to extend the Job Retention Scheme by another four months to the end of October. He confirmed that the Government will continue to provide 80% of employees’ monthly wages (up to £2,500) for those that are furloughed.
However, Mr Sunak has also stated that from August the Government will start asking companies to share this cost, with employers being encouraged to use the scheme gradually by bringing back staff on a part-time basis.
A quarter of the workforce (7.5m people) are currently covered by the scheme with a cost of £14bn per month. Greater flexibility being introduced in August will allow businesses to start to return to normality whilst reducing the cost on the taxpayer for the subsidy.
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