Sunak boosts 200 billion-pound job spending plan as England locks down

LONDON (Reuters) - British finance minister Rishi Sunak further ramped up his 200 billion-pound economic rescue programme on Thursday as England went into a tough new coronavirus lockdown.

FILE PHOTO: Britain's Chancellor of the Exchequer Rishi Sunak speaks at the House of Commons in London, Britain, October 22, 2020. UK Parliament/Jessica Taylor/Handout via REUTERS

Sunak extended the government’s costly coronavirus furlough scheme, which provides 80% of the pay of temporarily laid-off workers, until the end of March, and said he would provide billions of pounds of other jobs support.

“It’s clear the economic effects are much longer lasting for businesses than the duration of any restrictions, which is why we have decided to go further with our support,” Sunak told parliament.

Earlier on Thursday, the Bank of England said it was increasing the size of its government bond purchases by a further 150 billion pounds ($196 billion), helping the government to fund the surge in public spending.

As well as the furlough extension, Sunak increased support for self-employed people and raised guaranteed funding for the Scotland, Wales and Northern Ireland by 2 billion pounds to 16 billion pounds.

The furlough policy will be reviewed in January to see whether employers can increase their contributions from their current level of 5% of total employment costs, or about 70 pounds per employee per month.

Sunak’s plans to scale back Britain’s job support were blown off course last weekend when Prime Minister Boris Johnson announced a month-long lockdown for many people and businesses in England.

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Sunak said on Saturday he was extending the furlough scheme for a month to soften the hit of the new lockdown.

The scheme supported nearly 9 million jobs at one point and had been forecast to cost around 52 billion pounds over its eight-month lifespan, before the latest extensions.

The finance ministry said evidence from the first lockdown showed that the economic effects were much longer lasting for businesses than the duration of restrictions.

The opposition Labour Party said Sunak had moved too slowly to increase protection for workers who face a sharp rise in unemployment over the coming months.

Reporting by William James and Kate Holton; Writing by William Schomberg; editing by Sarah Young/Guy Faulconbridge