LONDON (Reuters) – British finance minister Rishi Sunak is considering measures ranging from tax cuts to hiring incentives as he tries to steer the world’s fifth-biggest economy towards recovery after a 25% coronavirus crash in March and April.
FILE PHOTO: Britain’s Chancellor of the Exchequer Rishi Sunak attends a news conference on the ongoing situation with the coronavirus disease (COVID-19) in London, Britain March 20, 2020. Julian Simmonds/Pool via REUTERS/File Photo
Sunak is due to announce new ways of helping the economy on Wednesday, followed by a budget statement in the autumn.
A string of job cut announcements has underscored the risk of a big jump in unemployment as the government prepares to wind down its huge job retention plan in the coming months.
Below are some of the options for Sunak, who has already rushed out an estimated 133 billion pounds of emergency spending and tax cuts.
CUT VAT TAX
Britain temporarily cut value-added tax in 2008 during the global financial crisis and Germany did the same last week for six months. Sunak has said he would first need to see how quickly consumers resume spending before following suit.
The Times newspaper reported on Sunday that Sunak would announce a temporary VAT cut for hospitality firms to protect 2.4 million jobs in the sector, which began to reopen on July 4.
The Observer said Sunak was considering a different option — handing out vouchers of 500 pounds ($625) for adults, and 250 pounds for children, to spend in hardest-hit sectors.
CUT PROPERTY TAX
The Times also said Sunak would announce a plan to raise the property tax threshold to as high as 500,000 pounds ($623,700), four times its current level. That would exempt most homebuyers from paying any stamp duty for up to a year.
The tax break would be part of Sunak’s autumn budget plan.
DOUBLE DOWN ON INVESTMENT
Prime Minister Boris Johnson last week promised a “Rooseveltian” boost to public spending but details of his plans showed he only intended to speed up existing infrastructure investments.
Last year he committed to increasing investment spending by 20 billion pounds annually, a figure that has been dwarfed by Britain’s response to COVID-19.
The finance ministry has said Sunak will announce the largest increase in traineeships and double the number of its job coaches.
The British Chambers of Commerce wants Sunak to cut employers’ social security contributions and take other measures to ease a cashflow crunch for companies.
The Confederation of British Industry has urged the government to offer incentives to consumers to buy electric cars and reduce carbon emissions from homes.
MORE TAX CUTS
The CBI has also asked the government to exempt all mid-sized companies from business rates – a property tax – something it did in March for the retail, hospitality and leisure sectors for a year.
($1 = 0.8003 pounds)
Writing by William Schomberg; Editing by Alison Williams