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-Sunak Says Govt. To Pay Employees Suspended From Work
-Announces VAT Suspension; Measures Designed To Support Employees
By David Robinson
     LONDON (MNI) - The UK government will pay up to 80% of the wages of those
who have stopped working but are still on their employers' books and defer
value-added tax for businesses as they contend with the coronavirus pandemic,
Chancellor of the Exchequer Rishi Sunak said on Friday.
     Following are key points from the package:
     -- Government grants will cover 80% of the salary of workers up to a total
of GBP2,500 a month, just above the median UK income. Any employer could ask
"for a grant to cover most of the wages of people who are not working but are
furloughed and kept on payrolls rather than being laid-off," Sunak told a news
conference.
     The scheme is set to run initially for three months, with Sunak saying that
he had not put any financial cap on it. The first grants should be available by
end April, suggesting payments should trickle through into some April pay
cheques.
     --The fiscal support came alongside the government's announcement that it
was forcing the closure of non-essential shops and of restaurants and bars,
which will lead to a surge in workers becoming idle.
     --The second part of the scheme was a VAT holiday, with the next quarter of
VAT deferred so that no business will pay any business from now until the end of
June.
     Sunak said business would have "until the end of the financial year to
repay those bills."
     This is simply a deferment of tax payments, which should be revenue neutral
for the Treasury over the course of the tax year ending in March 2021.
     --The government support measures, coupled with the inevitable slump in
economic activity, will lead to a sharp rise in borrowing.
     The Debt Management Office is set to issue an updated remit on April 23.
Planned gilt issuance will be raised to reflect the likely cost of the schemes
announced by the government.
     The Treasury and the Bank of England had previously unveiled a series of
measures to provide short-term loans to business, with the Bank unveiling GBP200
billion of quantitative easing in part to calm what BOE Governor Andrew Bailey
called "borderline disorderly" markets.
--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com
[TOPICS: M$B$$$,M$E$$$,MT$$$$,MFB$$$,MGB$$$]