Chancellor Rishi Sunak was praised for introducing an unprecedented coronavirus relief package to save jobs and avoid a total economic meltdown amid the COVID-19 pandemic, but can the UK afford to pay the bill when it’s all said and done?
Analysis from the Resolution Foundation estimates that the Coronavirus Job Retention Scheme (CJRS) could cost between £30bn and £40bn over three months, a figure that dramatically dwarfs the initial estimates from the Treasury. The same data estimates that around half of the UK’s companies are expecting to furlough most of their workforce, a total of between eight million and 11 million people.
This finding comes a few days after the HMRC published further guidance on the Scheme, which was widely welcomed by business leaders across the country but isn’t without its flaws. The Scheme was introduced with the aim of protecting jobs by covering 80% of an employee’s wages while on Furlough leave.
However, the CJRS has been criticised for its considerable loopholes, one of which affects employees that moved jobs after the 28th February.
With the end date of the UK shutdown still uncertain, the cost of the Government’s economic stimulus plan could be considerably higher. Analysis from financial risk firm Red Flag Alert estimated that economic disruption caused by the pandemic will see unpaid business debt double to more than £8.6bn this year.