Sunak’s Autumn Budget will need to be bolder than these half-measures

We’ll forget the astonishing £49bn so far spent in additional support for public services, much of it on PPE and test, track and isolate systems, much bigger than initially budgeted for. The strongest criticism that can be made of the new package is that it is not particularly large by international standards.

The German stimulus, for instance, is more than four times as big, and that’s assuming take-up of the UK initiatives achieve the headline numbers, which they won’t. As an answer to the expiry of the £60bn furlough scheme, they are most unlikely to do the trick.

But let’s not be churlish. Of all the measures, perhaps the most innovative was the jobs retention bonus, potentially worth £9bn if all nine million workers currently on furlough were to be taken back on staff. Obviously it is not as generous as the furlough itself.

Firms will have to make some difficult judgments on how quickly business activity, and therefore staffing needs, might recover. But it is a potentially important incentive nonetheless, which offers a useful reduction to firms in labour costs.

The VAT cut might likewise be regarded as more of a tax break to firms than to consumers. If the difference between the old 20pc rate, and the new, temporary 5pc rate is pocketed by the business rather than passed on by way of price reductions, it goes some way to compensating firms for the lower levels of footfall mandated by continued social distancing measures. In effect, the firm gets a 15pc increase in takings without any additional cost to the customer.

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