UK's Sunak boosts £200b jobs rescue

[LONDON] Finance minister Rishi Sunak ploughed more money into Britain's £200 billion (S$353.9 billion) economic rescue on Thursday in a coordinated move with the Bank of England, which will buy more of the bonds being sold to fund it.

A widespread surge in coronavirus infections has forced Prime Minister Boris Johnson to announce a new one-month lockdown in England, and has prompted a series of further spending pledges by Mr Sunak to stem the rising tide of job losses.

The announcement is Mr Sunak's fourth major revision to his economic plans in six weeks. Critics said he had failed to plan far enough ahead and was plunging businesses into confusion.

Mr Sunak extended his costly coronavirus furlough scheme, which provides 80 per cent of the pay of temporarily laid-off workers, until the end of March and he announced billions of pounds in other forms of 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," he told parliament.

Earlier, the Bank of England said it was increasing the size of its government bond purchases by £150 billion.

BoE Governor Andrew Bailey told reporters that coordination between the central bank and the government did not compromise the BoE's independence.

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

That all added to the eye-watering cost of the government's coronavirus response.

The furlough scheme extension was expected to cost around £1 billion a month for every one million people using it.

Britain is heading for a budget deficit of around 20 per cent of gross domestic product in the current financial year, its widest since World War Two.

REUTERS