M Younus Khokhar
THE United Kingdom is Europe’s hardest hit country where Covid-19 has so far caused over 44,600 deaths and has also dealt a severe blow to its economy. With the reduction in the number of deaths to less than two hundred but more than a hundred a day, the Government is now concentrating on well thought out measures to relax the lockdown and revive the dead economic activity. The Organisation for Economic Cooperation and Development has warned that Britain’s economy is likely to slump by 11.5% in 2020 outstripping falls in countries such as Germany, France, Spain and Italy. If there were a second peak in the pandemic, the UK economy could contract by as much as 14%. Having largely a service-based economy, it has been badly hit by the Government’s lockdown restrictions. It is still too early to predict how much the response to Covid-19 would cost but, according to the Office for Budget Responsibility (OBR), it is likely to be more than £300bn just for this financial year (April 2020 to April 2021). This is an enormous sum. Spending on measures to support public services, businesses and individuals amid the Coronavirus has risen to nearly £190bn. This includes the Government’s Job Retention Scheme whereby struggling employers could put their workers on furlough and temporarily send them home without paying them for a few months instead of getting rid of them altogether. The Government will also raise less tax than it originally visualised because of the crisis. Unemployed or furloughed workers would pay less income tax, businesses would pay less tax if their profits are lower, and shoppers would pay less VAT (Sales Tax) if they buy less.
Britain’s Office for National Statistics (ONS) has put out a comprehensive account of how the British economy has been affected so far. It says half of the companies had started suffering during the month of March even before the strict lockdown as their takings had gone down below the normal level. With the enhanced restrictions on movement and closure of non-essential business including gyms, hairdressers, cinemas and pubs in the last week of March, the economic activity slowed down to a great extent. Resultantly, over a quarter of firms were intending to lay off staff temporarily but this was averted by the Job Retention Scheme. The cost of cold and flue remedies as well as hand sanitisers, soap and toilet rolls soared with excessive price mark-ups. Many firms that export or import had serious supply chain issues due to Covid-19. Economic experts have warned that the shutdown can kill more people than Coronavirus itself. Coronavirus brought large parts of the economy to a standstill and the Government has had to spend billions to support workers, businesses and the National Health Service (NHS). In order to revive and rebuild the economy, the Chancellor of the Exchequer, Rishi Sunak, earlier this week announced a package worth up to £30bn which includes plans to protect jobs, younger workers and encourage spending.
In the hospitality sector, he ordered a reduction in VAT on food, accommodation, and attractions from 20% to 5% as part of his plan to prevent mass unemployment. To attract people to restaurants, the plan gives 50% off to people dining out during the month of August. The VAT cut will apply to eat-in or hot takeaway food and non-alcoholic drinks from restaurants, cafes and pubs, accommodation in hotels, B&Bs, campsites and caravan sites and attractions like cinemas, theme parks and zoos. To protect over 2.4 million jobs, the Government will also pay firms a £1,000 bonus for every staff member kept on for three months when the Job Retention Scheme ends in October. The Chancellor warned that hardship lies ahead but vowed no one will be left without hope. He rejected calls for extending the furlough scheme beyond October, saying it would give people false hope that they will have a job to return to, and the longer the people are on furlough, the more likely it is their skills could fade. He conceded that jobs would be lost but said he would never accept unemployment as an inevitable outcome of the pandemic. A temporary stamp duty holiday, costing £3.8bn, to stimulate the property market was another measure unveiled by the Chancellor. This will exempt the first £500,000 of all property sales from the stamp duty. About the burden of the disease, it is a common man’s question whether the Coronavirus is in retreat in the UK. The shorter answer is that yes, it is, but not fast enough. New confirmed cases of Covid-19 are falling in the UK, as are deaths. But health professionals have still concerns about the behaviour of the Coronavirus. They say that the rate of decline of both new cases and recorded deaths is slowing down. Obviously as the country opens up with the removal of lockdown, there is a need to be more vigilant and to bring the number of infected cases significantly and quickly down to ensure that the infected people do not serve a seed for a second outbreak.
—The writer is a Retired Deputy Controller of Radio Paskistan, currently based in the UK.
