LONDON – The coronavirus pandemic has turned everything on its head in the global economy, not least in Britain where the center-right Conservative government effectively socialized large chunks of the private sector and shut down the pubs.
After announcing Friday the closure of the recreation and leisure industry, including cinemas, gyms and restaurants for an indefinite period, in an effort to contain the virus' spread, the government said it would be stepping in to pay a large chunk of people's wages.
That's something that has never happened in the country's history.
Treasury chief Rishi Sunak said the government would be offering grants to all employers to pay four-fifths of the salaries of people who are not working but retained on the payroll rather than being laid off.
“For the first time in our history, the government is going to step in and help to pay people’s wages,” he said.
The so-called Coronavirus Job Retention Scheme will cover 80% of the salary of retained workers up to a total of 2,500 pounds ($2,875) a month. Employers will be able to top up salaries further if they choose to.
In addition, he announced further support measures for those who have lost their jobs and for those who are self-employed. A series of taxes, including those on sales, have been deferred while a business interruption loan scheme, worth 330 billion pounds, is now to be interest-free for 12 months.
“Unprecedented measures, for unprecedented times,” he said.
Though other countries around the world are firefighting the economic shock in similar ways, this is a staggering response from a government that won an overwhelming majority at December's general election, partly by attacking the supposed free-spending platform of the main Labour Party opposition.
Labour has been arguing for swifter action for the government and cautiously welcomed the latest moves but said more needed to be done, especially with regard to those who have lost their jobs, the self-employed, and for those who are sick.
Still, in just over a week, Prime Minister Boris Johnson's government has announced a series of stimulus measures aimed at keeping a lid on the economic damage likely from the virus outbreak.
The scale of Friday's measures suggest that it is deeply concerned about the scale of the recession and the associated job losses to come and that more measures are likely in the days and weeks ahead.
“If enacted fast and coupled with more robust interventions to support the most vulnerable the labour market, such as the self-employed and unemployed, these measures are likely to provide economic certainty to the population as it prepares for a prolonged period of distress,” said Dr Ivan Petrella, Associate Professor of Economics at Warwick Business School.