Rishi Sunak delivers economic update
12 January 2021
Chancellor of the Exchequer, Rishi Sunak has provided an update on the economy and delivered a comprehensive economic plan.
He confirmed that, in the second quarter of 2020, GDP fell by 18.8%, and although the economy grew as lockdown restrictions eased over the Summer, it was still 6.7% less than it was prior to the outbreak of coronavirus.
The Office for Budget Responsibility (OBR)’s November forecast revealed that GDP would decrease again in the final quarter of last year, and estimated that there would be the most substantial fall in annual output in more than 300 years.
The Chancellor also confirmed that, in spite of the measures delivered by Government to support jobs and individuals, in excess of 800,000 people have lost their jobs since February 2020. It is important to recognise that further national restrictions that have been imposed will also have a significant economic impact, and that the economy is expected to get worse before it gets better.
Mr. Sunak then outlined the measures put in place to support the economy, including:
- The Plan for Jobs
- Support for public services, such as the NHS
- The Coronavirus Job Retention Scheme (CJRS), which has seen 1.2 million employers furloughing nearly ten million employees
- The Self-Employment Income Support Scheme (SEISS) which has made payments to three million people, meaning support for the self-employed has reached nearly £20 billion
- Government-backed loans for more than 1.4 million small and medium sized companies, equating to more than £68 billion
- Tax cuts, tax deferrals and cash grants for businesses amounting to tens of billions of pounds
- At least £16.8 billion provided to the devolved administrations in Scotland, Wales and Northern Ireland
The Chancellor then moved on to discuss ongoing support, including the extension of the CJRS to the end of April, and the fourth grant available to those self-employed individuals eligible for the SEISS. An additional £4.6 billion has also been invested in protecting UK jobs and businesses following on from the latest set of restrictions imposed due to coronavirus.
In addition to this, business premises in England that have been made to close have access to one-off grants of up to a maximum of £9,000 for each premises, which will benefit more than 600,000 businesses, on top of the existing grants of up to £3,000 that are paid each month. Local authorities in England have also received discretionary funds, on top of the £1.1 billion given to local councils.
The information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our Coronavirus hub.