The chancellor, Rishi Sunak, is coming under pressure to announce a fresh package of emergency economic support for businesses and households after the last-minute launch of tougher Covid restrictions before Christmas.
Business leaders said that tier 4 restrictions in the south-east of England and new restrictions in Scotland, Wales and Northern Ireland would deliver a hammer-blow to companies struggling after a difficult year, risking more business failures and soaring unemployment.
Roger Barker, the director of policy at the Institute of Directors, said: “With the vaccine on its way, it would be a real shame to see jobs lost and viable companies collapse now. The chancellor should consider bolstering grants for businesses impacted by the restrictions, and fixing the gaps in the wider support. The period running up to Christmas is absolutely crucial to so many firms.”
Last week, the chancellor unexpectedly announced an extension of the furlough wage subsidy scheme until the end of April, a month longer than planned. He also extended the availability of Treasury-backed business loans until the end of March, and announced a budget for 3 March to set out the “next phase of the plan to tackle the virus and protect jobs”.
Coming just days before the renewed restrictions, economists said the additional support measures underscored a tacit acknowledgment in the Treasury that tough controls would be needed well into 2021, with Covid infections rising rapidly before vaccines can be deployed widely enough.
Torsten Bell, the chief executive of the Resolution Foundation, tweeted: “Bad news: Christmas plans having to change. Catastrophic news: if it’s confirmed this new strain does increase virus spread as much as feared = deeper lockdowns in new year AND restrictions lasting longer in 2021 (we’ll need a higher vaccination rate before normality returns).”
Matthew Fell, chief UK policy director at the CBI lobby group, said the extension of support meant help would be there for companies amid the latest restrictions. “But there’s no doubt a fresh look will be needed in January as to how the government can support UK businesses through to the spring. All efforts must be made to accelerate the rollout of mass rapid testing and the vaccine, so they can start to have an impact.”
Helen Dickinson, the chief executive of the British Retail Consortium, said the high street faced the prospect of losing £2bn a week in sales for the third time this year due to tougher restrictions.
“The consequences of this decision will be severe. For businesses, the government’s stop-start approach is deeply unhelpful – this decision comes only two weeks after the end of the last national lockdown and right in the middle of peak trading, which so many are depending on to power their recovery.”
Warning that many businesses would be in serious difficulty and many thousands of jobs would be at risk, Dickinson said retailers wanted relief on business rates – the levy paid by companies on the premises they occupy – to be extended next year.
“The government will need to offer additional financial support to help these businesses get back on an even keel,” she said.
A spokesman for the Treasury said: “We understand the pressure businesses and individuals in affected areas are currently under, which is why we’re helping them through the pandemic with a £280bn support package, which is among the most generous in the world, including extending furlough until April, helping to protect jobs.
“This includes grants for businesses forced to close of up to £3,000 a month, and grants of up to £2,100 per month to businesses which aren’t closed but are severely affected by restrictions.”
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