Last week, the Chancellor, Rishi Sunak unveiled his latest plan to support the economic recovery. As the job-retention scheme begins to unwind, Sunak has pledged to protect the jobs of furloughed workers by offering a £1,000 bonus to companies who retain these workers on their books. He has also promised to fund the wages of new younger employees for the next six months. The combination of these measures taken will hopefully support the estimated 700,000 graduates and school leavers that are entering the uncertain job market this summer.
Aside from the job protection measures, Sunak has introduced methods of stimulating spending in the economy by proposing an “Eat out to help out” scheme which rewards people with a 50% discount for dining in restaurants and cafes. Furthermore, the cut to VAT in the hospitality and tourism sector is a measure aimed to boost the short-term consumption in the economy by taking advantage of the lower prices on offer. The stamp duty measures raise the threshold to £500,000 which will hopefully stimulate a resurgence in the housing market.
On the outset, the package of up to £30 billion appears significant in nature with policies clearly designed to reduce the rapid rise in unemployment. The deployment of this package remains devoted towards seeing out the interim and subsequently dealing with the financing of this additional expenditure at a later stage.
Meanwhile, cases of the coronavirus continue to increase with the World Health Organisation reporting a daily increase of 230,370 cases on Saturday and with the US reporting their highest daily increase to date. However, the recent spike in the number of US coronavirus cases seems detached from market sentiment as the S&P 500 continues to climb, returning +3.91% year to date in GBP terms.
