Sunak announces 30b pound plan to save UK economy

London: Rishi Sunak set out a radical blueprint to save jobs and pump life into the UK’s coronavirus-battered economy, including tax cuts on home-buying and dining out, and a new bonus for employers who don’t fire their staff.

“We face profound economic challenges,” the Chancellor of the Exchequer told the House of Commons on Wednesday, laying out a stimulus package he intends to amplify in a budget and spending review in the fall. “In just two months our economy contracted by 25% – the same amount it grew in the previous eighteen years.”

He promised to stand by companies that keep faith with their workers and to do everything he can to save jobs and give families hope in the months ahead. Sunak’s 30 billion pound ($37.6 billion) package included:

Sunak faces a gargantuan task in pulling the world’s fifth-biggest economy out of what may be its worst recession in three centuries. Unemployment is expected to spike upwards as he unwinds unprecedented government programs that are funding the wages of more than 12 million workers.

Outlining his proposals on Wednesday, the chancellor said he will not be held back by political ideology, even after calls from some within his party to avoid piling up the nation’s debts.

“Where problems emerge, we will confront them. Where support is justified, we will provide it. Where challenges arise, we will overcome them,” he said. “We entered this crisis unencumbered by dogma and we continue in this spirit, driven always by the simple desire to do what is right.”

He announced a new program to reward employers if they take back furloughed workers and keep them on continuously through the end of January. Businesses will receive a 1,000-pound ($1,256) bonus per employee who returns from furlough in a policy potentially worth 9 billion ($11.3 billion) pounds.

Sunak cut the rate of value-added-tax on food, accommodation and attractions to 5% from 20%. The measure will last until Jan. 12, in what he said was a 4 billion pound catalyst.

He also announced an “Eat Out to Help Out” discount, offering a 50% price cut on meals at participating restaurants between Mondays and Wednesday in August.

The Treasury also unveiled a 2 billion-pound ($2.5 billion) program to pay the wages of more than 200,000 young workers, bringing to more than 6 billion pounds the value of measures to support jobs and environmental programs announced by Sunak in the run-up to his statement.

That’s in addition to 5 billion pounds of infrastructure spending on schools, hospitals and roads, announced last week by Prime Minister Boris Johnson, who pledged the U.K. will “build, build, build” to emerge from the crisis.

Bond markets have shrugged off Sunak’s latest largesse, which doesn’t stand out in the current climate of high spending. Yields on 10-year bonds fell 1 basis points to 0.17%. Investors are more focused on the BOE’s plans for asset purchases and the latest issuance plans from the Debt Management Office, which are due on July 14.

Pub company Marston’s erased an earlier loss to gain as much as 3.5%, while Wagamama restaurant chain-owner Restaurant Group jumped as much as 7.7% before trimming the gain.