The Bank of England has released 150 billion pounds (about $195 billion) to strengthen the UK’s ailing economy as a second COVID blocking mechanism comes into effect. It is hoped that the liquidity boost will mitigate the economic blow of the severe nationwide restrictions, while a grim warning is sounded of a collapse in the country’s economic performance in the last three months of 2020.
Members of the Central Bank’s Monetary Policy Committee voted unanimously to expand the quantitative easing program to £895 billion ($1.1 trillion), but kept interest rates at a historic low of 0.1 percent. He said that gross domestic product (GDP), the value of a country’s products and services, would rise in the first quarter of 2021, but warned that activity would still remain “much lower” than before the COVID crisis.
The decision was made when England’s 56 million people joined much of Western Europe in a second coronavirus curtailment, with other nations of the United Kingdom in Scotland, Wales and Northern Ireland already subject to other far-reaching restrictions. And while it turned out that more than 11 million people across Europe have been infected to date, the US set a new record with almost 100,000 new infections daily.
The UK is one of the hardest hit countries in the world, with just over one million virus infections and almost 48,000 deaths. Britain’s cordoning off follows similar measures as France and Germany and parts of Italy, which will join the list starting Friday. People are not allowed to meet people they do not live with and must stay at home unless they have to go out for certain limited reasons, such as medical treatment or sports.
But the hospitality industry, already on its knees after months of restrictions and a 10 p.m. curfew, will bear the brunt of the tough new rules. Bars, restaurants and pubs are now closed for the next month. Leisure facilities such as cinemas, non-essential stores, beauty and hairdressing salons and fitness studios have also closed their doors.
Experts fear that this could plunge Britain into a double-dip recession, but the bank’s latest forecasts suggest that the economy will narrowly avoid this as long as activity recovers early next year. Commenting on its latest assessment, the Central Bank said: “COVID continues to weigh on jobs, income and spending in the UK. It has put a heavy strain on the cash flow of British businesses and threatens the livelihoods of many people. It predicts that around 5.5 million workers will be made redundant this month.
UK Chancellor Rishi Sunak has announced an extension until March 2021 of the government’s Coronavirus Job Retention Scheme (JRS), which pays 80% of the wages of workers on leave.
Prime Minister Boris Johnson had already announced that during England’s second suspension, leave would be extended by one month. So far, the JRS has cost the UK more than £40 billion since its introduction in March and has been taken up by up to 9 million workers at its peak.
In a statement today, Sunak said that the program will remain in place beyond December 2, when the lockdown will end across England, and will be available to workers in all areas of the UK under the strictest coronavirus controls. This will guarantee continued funding for third stage regions in England and in Scotland, Wales and Northern Ireland should the devolved administrations introduce their own blocking measures.
Prior to the announcement of a second lockdown, the program should be replaced by a less generous Job Support Scheme (JSS), under which British workers can receive 67 percent of their salary if their employers are called on to close down due to the pandemic. Leaders in the north of England – who at the time were under the country’s highest COVID restrictions under a graduated lockdown system – said the JSS payment did not go far enough. At the time, the government categorically refused to increase the leave program.
Sunak was under increasing pressure to save jobs and the economy during the second wave after doctors and scientists said they expected the suspension to be extended beyond the December deadline.
Britain’s leading business lobby group and the top trade union body forde