By Powerscourt on 21/06/2020
There is much speculation today about what steps the UK government will take to kick-start the economy. According to the Sunday Times, Chancellor Rishi Sunak is ready to slash VAT and zero rate more products for a fixed period.
The measures seem to be drawn from a policy paper written by the former Chancellor Sajid Javid for the Centre for Policy Studies. Other measures said to be under discussion include cutting employers’ national insurance contributions to encourage firms to hold on to staff and extending business rate relief. The Chancellor is due to make a planned speech on the economy in early July when some of these measures could be announced.
Treasury officials are also said to be examining plans under which the taxpayer would take stakes worth £15 billion in small firms.
Conversely, a letter signed by MPs including former Labour shadow chancellor John McDonnell, Green MP Caroline Lucas and Guardian columnist Owen Jones is referenced throughout a number of Sunday newspapers, urging the Chancellor to consider a four-day working week as part of efforts to overhaul the economy after the coronavirus pandemic, arguing that reducing working hours will ensure that ‘work is shared more equally’.
In the US, President Trump told supporters he had asked US officials to slow down testing for coronavirus, calling it a ‘double edged sword’ that led to more cases been discovered. “When you do testing to that extent you’re going to find more cases…so I said to my people slow the testing down.” White House officials later said President was joking. Fears of a second wave of the virus in the US heightened over the weekend when it was revealed that Florida had recorded consecutive daily records of new cases on Thursday and Friday with 3,207 and 3,822 cases, respectively, eclipsing the previous recorded high by more than 35%.
WHAT ARE COMPANIES SAYING?
Industrials & Transport
In an interview with The Telegraph, Andy Barratt, Ford of Britain’s managing director, has said: “The UK car industry is worth about £44bn overall and end-to-end employs about one million people…One of the quickest ways to kickstart the economy and to get manufacturing moving is to stimulate [the economy] in whatever way possible”. He added that, “we see this as an industrial stimulus strategy rather than a car market strategy. We have to look at how we get as much moving through the system as we can, as many people unfurloughed as we can – and we need to get UK plc up and running again”.
Financials & Real Estate
Lloyds Bank is handing £10m to 40,000 frontline staff for their efforts during the coronavirus crisis – but has sparked frustration by overlooking managers. Chief executive Antonio Horta-Osorio, 56, said in an internal memo that he was “proud” of employees for working tirelessly in branches, offices, and at home, during the lockdown. The bank will pay £250 to individuals in the lower ranks in recognition, he said. However, The Sunday Times reports that some branch managers, who have been among the most exposed during the coronavirus, missed out on the payment.
A short-seller who exposed financial irregularities at the German payments company Wirecard has accused the City watchdog and credit card giants Visa and Mastercard of turning a blind eye to its problems. Wirecard, once a member of Germany’s Dax 30 index of top companies, admitted last week that €1.9bn (£1.7bn) was missing from its accounts, sending its shares crashing. The former tech darling is a key part of the financial infrastructure that enables online payments worth hundreds of billions a year, linking consumers, retailers, banks and credit card firms.
The Sunday Times reports that Chinese telecoms giant Huawei faces a fresh row over plans to build a £400m R&D centre near Cambridge, in the heart of “Silicon Fen”. Huawei, which is at the centre of a global battle over its role in Britain’s 5G mobile network, is expected to receive planning permission this week to construct a facility for researching and developing chips for use in broadband. The site is in the village of Sawston, seven miles from Cambridge and a 15-minute drive from the Japanese-owned semiconductor giant ARM Holdings.
IN THE NEWS
Rishi Sunak plans emergency cut in VAT to rescue ailing economy – The Sunday Times
‘One metre plus’, the new rule that will reopen UK – The Telegraph
Millions of European jobs at risk when furlough support ends – Financial Times