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What's going on?

The UK government came to the rescue of British workers and businesses on Thursday, announcing several new support measures that set hearts aflutter. Swoon…

What does this mean?

The UKs furlough scheme pays up to 80% of the salaries of workers who havent been able to do their jobs since the pandemic shut down the country. But economists are nervous that unemployment will shoot up after the scheme expires at the end of October especially given how far the UK economy is off a recovery. It has just imposed brand new restrictions, after all.


Cue the UK finance minister’s theme song: he announced that the government will be bolstering the existing bonus scheme for companies who bring workers back with new wage subsidies. Theyll start in November, last for six months, and provide an employee who works a third of their normal hours with 77% of their full pay, split between their employer and the government. The UK also postponed planned tax rises for the hard-hit leisure and hospitality sectors, and extended the repayment period for the emergency loans it made available earlier this year.

Why should I care?

For markets: Well, if you insist.


To pay for these new measures, the UK government will have to borrow more money. And with Britains debt already at a record $2.6 trillion, youd be forgiven for wondering if itll be able to repay that total. Luckily, theres such high demand for government bonds that the yields on the UKs which move inversely to their prices have plummeted, meaning its never been more affordable for the country to borrow cash.



The bigger picture: Pyrrhic victories.


The UKs latest support package wont necessarily keep employment as high as its touted to: employers could theoretically replace furloughed employees with part-time workers, saving on extra pay. And in industries still on their knees like events workers dont even have reduced jobs to return to.

Originally posted as part of the Finimize daily email.

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