The Chancellor Rishi Sunak announced in the House of Commons on Thursday morning that there will be a new support package for businesses affected by tier 2 restrictions.
The new financial plan will help businesses, particularly pubs and restaurants who have seen a fall in trade due to the government’s restrictions.
Responding to the Chancellor’s announcement of increased support for businesses and workers hit by Covid-19 restrictions, IEA Director General Mark Littlewood said, “The longer we are trapped in this government support scheme limbo, the more important it is for the Chancellor to turn his focus to ensuring a dramatic economic bounceback.
“This will require a radical package of measures to reduce the tax and regulatory burden on businesses, if we are to see anything approaching a V-shaped recovery.
“If this virus is going to be with us for a prolonged period of time, we need urgently to reconsider regional, local lockdowns and move towards selective demographic lockdowns, with a focus on shielding and providing support for the most at-risk groups, including the elderly and those with underlying health conditions.”
IEA Economics Fellow Julian Jessop said, “Whether the additional Covid-19 restrictions are appropriate is debatable, but there is at least a good economic case for more financial support when businesses are unable to trade as normal.
“It makes sense to protect jobs and incomes during temporary lockdowns, rather than expose firms and employees to the additional costs and uncertainty of firing and then rehiring again. This will also minimise the risk of longer-term economic scarring, including much higher unemployment.
“This is the fair thing to do as well when particular regions, or sectors, are bearing a disproportionate share of the burden of a national crisis. Managing a pandemic is a textbook example of a ‘public good’ when a collective response is required.
“The additional hit to the public finances is concerning and clearly this level of support is not sustainable indefinitely. In the meantime, it is right that fiscal policy plays its full part in preventing even bigger economic and social problems.”
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