On 8th July 2020 the Chancellor of the Exchequer, Rishi Sunak, delivered an economic ‘Summer Statement’ which contained an economic plan to help the UK economy recover from the impact of the coronavirus pandemic. This is the second wave of government money that has been released to react to the impact of coronavirus.
Basic summary of the purpose of the statement and money made available:
- To protect jobs from the impact of the coronavirus. We all know from talking to businesses that jobs are at risk right now. This is because the economy essentially shut down and people weren’t going out and spending their money (known as demand) which stopped businesses selling products and services to make money (the suppliers). There are lots of ways the government can support jobs and the Chancellor has decided to try and achieve this through lots of different ways. He has made money available for employers to keep staff (called the Coronavirus Job Retention Bonus Scheme). He has provided additional funding to support young people to get employment (called the Kickstart Scheme, Traineeships for Young People and Payments for employers who hire new apprentices). Young people aged 16-24 are the most likely to be at risk of redundancy or long-term unemployment due to coronavirus. The government is also trying to create jobs by spending government money on big projects. Road maintenance, infrastructure projects and town centres will receive more money to create jobs and create business. The government is also making grants available for people to make their homes more energy efficient by spending money on eco-friendly refurbishments. This is intended to create jobs by creating demand for these products and services.
- To create consumer demand. In other words, to encourage people to spend their money in shops and restaurants to get the economy moving again (Eat out scheme, VAT Cut for restaurants, hotels and attractions).
- To protect the housing market. To maintain prices of homes the chancellor is trying to stimulate demand. This is similar to the ‘create consumer demand’ point.
- To protect the automotive sector. Due to lockdown the demand for cars has dropped dramatically. To protect this sector from collapse, the Chancellor has announced lots of funding for manufacturers to help them create innovative research and Development projects to increase the manufacturing of the latest technology in batteries, motors, electronics and fuel cells. This is known as the automotive transformation Fund.
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