Virus-hit UK firms get extra support as cases spiral

LONDON — The British government on Friday said it would pay up to two-thirds of staff monthly wages to firms forced to close over the winter months, as infection rates skyrocket.

Finance minister Rishi Sunak extended a scheme launched just two weeks ago for workers taking reduced hours to help businesses required to shut as part of efforts to cut transmission rates.

More than 42,000 people have died in the outbreak in Britain — the worst toll in Europe — and concern is mounting about a potentially deadlier second wave, and its social and economic impact.

The UK economy grew by a weaker-than-expected 2.1 per cent in August and remained far down on pre-pandemic levels, official data showed on Friday.

It shrank by a fifth in the second quarter, entering recession on the back of a full lockdown that was only eased in June.

Under the extended scheme, businesses will receive grants to pay the wages of staff who cannot work, with the government paying two-thirds of each employee's monthly salary up to a maximum of £2,100 ($2,715, 2,309 euros) per month each.

Their employers will pay national insurance and pension contributions but will not be asked to contribute towards wages, unlike other firms using the scheme.

"Throughout this crisis my priority has always been to protect jobs, so today I'm announcing an expansion of our jobs support scheme, specifically to protect those jobs of people who work in businesses who may be asked to close," Sunak told reporters.

"If that happens those workers will receive two-thirds of their wages for the time that they're unable to go to work."

'Safety net' 

"I hope this provides reassurance and a safety net for people and businesses in advance of what may be a difficult winter," Sunak added.

A Treasury source estimated that the expanded scheme would cost "hundreds of millions" of pounds a month.

From November, the government will nevertheless water down its nationwide jobs support that has helped keep millions of people in employment during the pandemic.

Many analysts fear this will lead to a surge in unemployment, with the hospitality sector particularly affected.

Sunak denied on Friday that his latest enlarged scheme would replicate the so-called furlough plan, which ends in late October.

"This is a very different scheme to what we've had before. This is not a universal approach," he told reporters.

"This is an expansion of the jobs support scheme specifically for those people who are in businesses that will be formally or legally asked to close so in that sense it's very different.

"I've always said that we will adapt and evolve our response as the situation on the health side adapts and evolves. That's what's happening."