UK's furlough bill hits 54 billion pounds in new lockdown

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UK's furlough bill hits 54 billion pounds in new lockdown

By David Milliken

 

FILE PHOTO: A man walks past a closed branch of the Co-Operative bank following the outbreak of the coronavirus disease (COVID-19) in St Helens, Britain, August 12, 2020. REUTERS/Phil Noble

 

LONDON (Reuters) - The cost of Britain’s furlough scheme reached 53.8 billion pounds last month as the country went back into a coronavirus lockdown, data showed on Thursday, days before finance minister Rishi Sunak sets out the scheme’s future.

 

The number of jobs covered by the coronavirus job protection scheme rose to 4.7 million at the end of January, the Treasury said.

 

The scheme is due to end on April 30, after which the Bank of England fears a jump in unemployment, but Prime Minister Boris Johnson has said support will continue as the current lockdown in England will not be fully lifted before late June.

 

Sunak will announce his budget plans on March 3. Borrowing in the current financial year is seen around 400 billion pounds, the highest as a share of the economy since World War Two.

 

The National Institute of Economic and Social Research think tank estimates the furlough programme - which typically pays employees 80% of their salary - is likely to cost over 70 billion pounds by the end of April.

 

Last year Britain’s economy shrank by 9.9%, its biggest contraction in 300 years, and Britain has also suffered the highest official COVID death rate of any large country.

 

Britain entered a third lockdown in early January to slow the spread of new coronavirus variants and aid the roll-out of vaccines, which has proceeded faster than elsewhere in Europe.

 

The number of jobs furloughed as of Jan. 31 is well below the peak of 8.9 million in May, during Britain’s first coronavirus lockdown, but above the 3.9 million during a second England-wide one in November.

 

A separate survey from the Office for National Statistics showed businesses had furloughed 20% of staff on average in early February.

 

Only 72% of firms said they were currently trading. Non-essential shops, restaurants, pubs, gyms, hairdressers and other firms must close to the public under the lockdown rules.

 

Spending on credit and debit cards, as measured by payment data collected by the Bank of England, rose to 75% of its average level in February 2020 in the week to Feb. 18, up from a trough of 62% recorded in early January.

 

However, the ONS said these figures were not seasonally adjusted and there was a similar rise the year before.

 

Lending to businesses under three government-guaranteed schemes stood at to 72.9 billion pounds as of Feb. 21, up from 70.7 billion pounds a month earlier, the finance ministry said.

 

-- © Copyright Reuters 2021-02-25

 

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