LONDON (Reuters) – British finance minister Rishi Sunak is considering a range of measures, from tax cuts to hiring incentives, as he tries to steer the world’s fifth-biggest economy towards recovery after its 25% coronavirus crash in March and April.
Shops in England reopened on Monday, an important step in a probably slow recovery. Below are some of the options for Sunak, who has already rushed out an estimated 133 billion pounds ($167 billion) of emergency spending and tax cuts.
He is expected to announce new ways of helping the economy later this month or in July followed by a budget statement in the autumn.
REDUCING THE TWO-METRE RULE
The government is reviewing its two-metre social distancing rule in England which many employers – especially in the hospitality sector which might reopen in July – say is a big hurdle to getting back up to speed.
Sunak said on Sunday that three quarters of pubs could reopen with a shorter distance requirement, compared with about one third with a two-metre rule.
But he stressed the government would move “safely and slowly” with any changes.
CUTTING VAT TAX
Britain temporarily cut value-added tax in 2008 during the global financial crisis, and Germany will do the same from July 1 for six months. Sunak suggested he was open to the idea but would first need to see how quickly consumers resumed spending.
“Before we have that conversation we need to actually reopen those sectors. There’s no point in cutting VAT on a sector that is actually closed,” Sunak said.
DOUBLE DOWN ON INVESTMENT
Prime Minister Boris Johnson has said he wants to double down on his pre-crisis plans to ramp up public investment in infrastructure, broadband and training.
Last year Johnson committed to increasing investment spending by 20 billion pounds annually, a figure that has been dwarfed by Britain’s response to COVID-19.
HIRING INCENTIVES, SKILLS
Johnson and Sunak say employers need help to hire workers.
The Sunday Telegraph newspaper said they were considering an increase in a tax incentive for small firms to hire workers, as well as a suspension of social security payments by employers.
Johnson said this month that he wanted every young person to be guaranteed an apprenticeship.
The Confederation of British Industry has urged the government to offer incentives to consumers to buy electric cars and reduce carbon emissions from homes.
MORE TAX CUTS
The CBI has also asked the government to exempt all mid-sized companies from business rates – a property tax – something it did in March for the retail, hospitality and leisure sectors for a year.
($1 = 0.7980 pounds)
(Writing by William Schomberg; Editing by Hugh Lawson)