Job retention scheme is extended until October

The government’s coronavirus job retention scheme has been extended until October. Chancellor Rishi Sunak said the furlough scheme will remain the same until the end of July, but from August to October there will be “greater flexibility” including allowing part-time workers on the scheme and asking employers to contribute toward some of it. The government says it will still pay at least 50% of wages through the scheme after July. “Employers will be able to bring furloughed employees back part-time. We will ask employers to share the costs of paying people’s salaries,” Mr Sunak said, adding “Workers will, through the combined efforts of government and employers, continue to receive the same level of overall support as they do now at 80% of their current salary up to £2,500 a month.” The scheme will cost £40bn for every three months it runs, according to the Office of Budget Responsibility (OB R).

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Treasury assessment points to tax hikes to pay £300bn virus bill

A Treasury document outlining possible measures to recover the UK’s finances after what could be a £300bn bill for rescuing the economy in 2020 indicates income tax could rise and the triple lock on state pension increases could come to an end. A two-year public pay freeze could also be announced as part of efforts to restore fiscal credibility and boost investor confidence in the UK, the document states. The confidential paper reveals a “baseline” scenario that gives Britain a £337bn budget deficit this year, compared to the forecast £55bn in March’s Budget. The equivalent of a 5p increase in the basic rate of income tax would be needed to fund the increased debt. The worst case scenario envisages a £516bn deficit and the best case picture leads to a £209bn deficit this year. If Britain’s economy does not recover soon, the document warns, the country could be thrown into a sovereign debt crisis .

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COVID-19 pushes up demand for advice among millennials

According to new research from Quilter, millennials are leading an increasing demand for advice during lockdown. The research found that 64% of millennials aged 18-30 would consider getting financial advice. The research also showed that 48% of millennials are saving more, and 52% of those nervous about their finances would consider using a financial adviser. Quilter Financial Planning head of adviser recruitment and acquisition Scott Stevens comments: “It is encouraging millennials are leading the charge and it is important that we encourage this group to keep up their saving habits and invest appropriately.”

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Emergency business loan fraud concerns

Royal Bank of Scotland has had to review as many as 20% of the applications for the emergency business loan scheme after they were flagged as potentially fraudulent, the Telegraph reports. According to UK Finance, over 304,000 businesses have now received almost £15bn through the state-backed coronavirus loan programmes. John Cronin, a Goodbody analyst, said fraudulent claims are a concern for banks lending under the scheme. “I also am concerned about banks lending to businesses that are not creditworthy ,” he added. “There is no pre-COVID-19 viability assessment.” Separately, Rishi Sunak, the Chancellor, yesterday revealed that 267,000 loans worth £8.4bn had been made under the government’s Bounce Back Loan Scheme since it launched on May 4th.

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Many employers yet to receive furlough scheme money

Hundreds of employers who have furloughed workers amid the COVID-19 outbreak still have not received money through the government’s job retention scheme, according to a poll of more than 900 firms commissioned by comparison website The survey found that nearly half of UK firms have furloughed staff, but 71% have not yet received support through the scheme. Eighty-six per cent of micro-businesses and 65% of small businesses have not yet received support, according to the survey.

City AM

FSB warns a third of small businesses may close forever

A survey by the Federation of Small Businesses has found that a third of small firms that have temporarily shut during the coronavirus lockdown are concerned they will never reopen. Over 25% of businesses paying a mortgage or lease on their premises have failed to make, or faced severe difficulties in making, repayments as a result of the pandemic’s economic impacts, the FSB warned.

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EasyJet founder offers £5m of own cash in bid to prevent deal

As his battle with easyJet management continues, founder Sir Stelios Haji-Ioannou is offering £5m of his own money to whistleblowers who can help to bring about the cancellation of the airline’s order for over 100 new Airbus aircraft. He is seeking information from “current or past hard-working easyJet employees or anyone else who has seen anything suspicious by anyone inside easyJet in their dealings with Airbus,” with anonymity assured and legal costs covered. EasyJet has responded to claims by Mr Haji-Ioannou, with a spokesman saying: “The board firmly rejects any insinuation that easyJet was involved in any impropriety.” The company said that BDO were brought in at the time of the order in 2013 to identify any dishonesty during the procurement. “The audit report confirmed that robust procurement, project management and governance processes were in place and had been followed.”

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Carnival UK planning ‘large number’ of redundancies

The giant cruise company Carnival UK has revealed a plan to make large numbers of staff redundant in Southampton. The company’s Cunard Line and P&O Cruises brands employ around 1,100 people in the area. President Josh Weinstein warned that if severe measures were not taken Carnival “may not successfully get to the other side of this”.

The Daily Telegraph


Furlough scheme amounts to bailout of landlords

Economists have warned that the government furlough scheme is effectively an implicit bailout for landlords and banks, as almost half the funds awarded by the scheme will be spent on rent and debt repayments. In a new paper from the IPPR think tank, economists say that up to 45% of the net cost of the furlough scheme will be spent on rent and debt repayments to landlords, banks and other lenders, amounting to £10bn under a three-month shutdown, and £21bn for six months. “The long-term effects of rising indebtedness on the one hand, and a likely rebound in asset prices on the other, are likely to further widen inequalities between the working poor and the asset-owning wealthy, the report argues.”

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House moves and viewings to resume in England

House moves and viewings will be able to resume again in England from today, under new coronavirus rules announced by housing secretary Robert Jenrick. Carrying out viewings, house moves and trips to letting or estate agents will now be legal again. According to property website Zoopla, around 373,000 property transactions across the UK, with a total value of £82bn, have been put on hold due to lockdown measures.

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UK consumer spending drops over a third during lockdown

Consumer spending fell 36.5% in April compared with the same month last year, according to Barclaycard data, as shops and pubs shut to limit the spread of COVID-19. The contraction came despite a strong performance of grocery shopping and online sales. Separate data from the British Retail Consortium show that online sales rose 60% in April, well above the 12-month average of 8%. Overall sales fell 19.1% last month compared with an increase of 2.4% last year, the BRC said, the steepest fall since the trade body started recording sales in January 1995.

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Bank of England to keep negative rates under review

Bank of England deputy governor Ben Broadbent has said the Bank will keep the idea of negative interest rates in the UK under review, as it had done since the financial crisis. Asked about the policy on CNBC, he said it was a matter of “balanced judgement”. He went on to say that it is “quite possible that more monetary easing will be needed over time,” with many analysts believing this stimulus will come in the form of an increase in the Bank’s £645bn QE programme.

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Contact Paul Southward

Paul Southward