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Summer Economic Update 2020 announcements made on 8 July 2020

8 July 2020

COVID-19

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In a word the theme of Chancellor Rishi Sunak’s update was “jobs” with a range of further measures announced to insulate people and support businesses through the ongoing COVID-19 pandemic.

According to the Chancellor, more than two million jobs could be lost when the furlough scheme ends in October, and the country could be facing the worst recession since the Great Frost of 1709. In just two months this year, GDP dropped 25%.

The measures include new job creation schemes to help counteract rising unemployment.

There are new work placements with the government covering the minimum wage for young workers, and employers will be offered incentives to create more apprenticeships.

Tax announcements include an immediate temporary increase in the stamp duty threshold to £500,000 and a VAT cut to 5% for the hospitality sector. 

For the month of August there will be a 50% reduction, up to £10 per head, on sit-down meals and non-alcoholic drinks Monday-Wednesday.

The Chancellor also unveiled a £3 billion green jobs package, including vouchers for people to insulate their homes.

The key announcements from the Budget are summarised below:

  • There will be a Budget and Spending Review in the autumn.
  • Flexible Furlough Scheme will end in October (as previously announced).
  • New Job Retention bonus of £1,000 per employee for employers bringing back employees from furlough and who remain continuously employed up to 31 January 2021.
  • £2bn Kickstart Scheme for 16 to 24 year olds who are on Universal Credit – Employers can apply for a six month grant to cover 100% of relevant National Minimum Wage plus associated employer NICs and minimum pension contributions. No cap on places, but employee must work at least 25 hours per week.
  • Payments for employers who hire new apprentices – a payment of £2,000 to employers in England for each new apprentice hired aged under 25, and a £1,500 payment for each new apprentice hired aged 25 and over, from 1st August 2020 to 31st January 2021. Paid in addition to existing funding .
  • New £1,000 traineeships incentives for employers to fund work placements for 16-24 year olds.
  • Funding for new careers advisers and work coaches.
  • £2bn green homes grant to make homes more energy efficient.
  • Temporary cut in stamp duty – raising the threshold from £125,000 to £500,000.
  • VAT rate cut for the hospitality  and tourism sectors including eating out, accommodation and other venues, to 5% for six months.
  • August discount for Monday to Wednesday eating out – 50% discount up to £10 per head.

Further updates will follow as more details of these measures are released.