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Sunak fires third UK aid salvo in a month for ailing economy

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Chancellor of the Exchequer Rishi Sunak increased the generosity of the UK aid package for businesses hamstrung by the resurgent coronavirus pandemic, his third push in less than a month to stop a wave of job losses sweeping across the country.

[LONDON] Chancellor of the Exchequer Rishi Sunak increased the generosity of the UK aid package for businesses hamstrung by the resurgent coronavirus pandemic, his third push in less than a month to stop a wave of job losses sweeping across the country.

Mr Sunak increased government contributions to workers' wages, and reduced the hours they have to work in order to qualify for a state programme to support employees' pay. He also stepped up help for the self-employed and announced package of grants to businesses that aren't required to close, but are suffering because of coronavirus restrictions.

"It is clear that even businesses who can stay open are facing profound economic uncertainty,"Mr Sunak told the House of Commons. "There are difficult days and weeks ahead. But we will get through this together." The changes follow bitter rows between Boris Johnson's government and local leaders in northern England over the scale of support to businesses that face a winter of uncertainty after being forced to close their doors again.

Countering criticism that the government is sidelining the North, Mr Sunak said the new grants for businesses in areas under less onerous so-called tier 2 restrictions would be backdated to August for parts of the country that have faced those rules for longer. London moved into tier 2 last weekend.

"The backdating of the new grants means we are being more generous to businesses and places which have been under higher restriction for longer," Mr Sunak told Parliament. "Let no one say, Mr Speaker, that this government is not committed to supporting the people and businesses in every region." While Mr Sunak had wanted to wean firms and workers off aid, those efforts have been overtaken by the rapid spread of the virus and renewed localised restrictions. Curbs on economic activity threaten to worsen a spike in unemployment, and a recession predicted to be the sharpest and deepest in three centuries.

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"We've got to get ahead of this crisis instead of always running to keep up," Labour Shadow Chancellor Anneliese Dodds told the Commons. "For months, we've urged the chancellor to get ahead of with the looming unemployment crisis and act to save jobs. Instead, we've had a patchwork of poor ideas rushed out at the last minute." Under the new plans announced by Mr Sunak on Thursday: Employees now only need to work 20 per cent of their normal hours to qualify for the job support programme which starts on Nov 1, down from 33 per cent. The government cut the proportion of the wages for unworked hours that businesses must pay to employees who are returning part-time. The share that businesses must pay will fall to 5 per cent from 33 per cent, with the state contribution increasing Businesses under tier 2 restrictions will qualify for grants worth US$2,752 a month, to be paid out by local authorities. The grants will be backdated to August State grants for self employed people will double to 40 per cent of their wages.

Bloomberg

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