By Ben Kerrigan-
Rushi Sunak has scrapped his plan for an autumn budget and will announce an extension of business loan schemes to halt job losses and business failures on Thursday, given government fears that a second wave of Covid-19 could worsen the Uk economy.
The chancellor’s fresh plans are designed to avoid a short-term economic crisis.
Sunak plans to use his statement to MPs to announce an extension of business loan schemes, including an employment support package to replace the government’s furlough scheme, which is due to end next month.
Sunak said he would announce the details of a “winter economy plan” that would “continue protecting jobs” as Britain enters a new phase of the pandemic.
“No one wanted to be in this situation but we need to respond to it,” a Treasury source said. “The chancellor has shown he has been creative in the past and we hope that people will trust us to continue in that vein. Giving people reassurance and businesses the help they need to get through this is uppermost in his mind.”
Against a backdrop of rising job losses and a worsening growth outlook, business groups, Labour and trade unions said Sunak urgently needed to step back from ending the furlough, or at least replace the jobs programme with a successor scheme.
The chancellor’s plans are to focus on avoiding a short-term economic crisis. Sunak plans to use his statement to MPs to announce an extension of business loan schemes and a package of employment support to replace the government’s furlough scheme, due to end next month.
The chancellor said he would announce the details of a “winter economy plan” that would “continue protecting jobs” as Britain enters a new phase of the pandemic.
On Wednesday, the British prime minister spoke of “continuing to put our arms around the people of this country”.
“We will go forward with further creative and imaginative schemes to keep our economy moving,” he said.
Alongside the flagship wage subsidy plan, another measure forming the backbone of Sunak’s winter plan for the economy is expected to be an extension in the Treasury’s Covid loan scheme for businesses.
The furlough scheme which has cost £39bn since its launched in April, is due to end this September..
Sunak’s decision means the autumn budget has been delayed for a second year, although the Office for Budget Responsibility will still publish updated forecasts for the economy and the public finances in November. By law, the OBR has to publish two forecasts a year.