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Tax Cuts And Spending Increases: The Government Plan To Save The UK Economy

The Government has announced a £30 billion plan in order to prevent mass unemployment.  Employers will be paid £1000 for every employer kept on after the furlough period and the Government plans for a scheme to encourage restaurant dining after restrictions are lifted.

The chancellor hopes that this will ensure that no-one will be left “without hope” after the restrictions have passed.

Picture by Andrew Parsons / No 10 Downing Street Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0)

The highlights of the chancellor’s plan include an “Eat Out to Help Out”  discount in which the Government subsidises part of the cost of eating out in order to protect the restaurant and foodservice industry, and a nearly £4bn stamp duty holiday to stimulate the real estate industry.

Despite the intense spending, the chancellor has announced plans to cut VAT from 20% to 5% for food and attractions in order to encourage spending and rebuild the economy faster.

The plans have been extensively criticised. The plan to pay employers £1000 per employee has been said to be too little to actually encourage employers not to lay off staff.

Photo by GoToVan from Vancouver, Canada ,Attribution 2.0 Generic (CC BY 2.0)

The Chancellor admits that there will be a level of unemployment but these measures are intended to minimise the impact. Plans to pay for the measures are likely to be realised in the Autumn, with the cost potentially nearing £10bn.

Instability around the Brexit transition period will also a compounding effect on long term economic recovery.

What do you think about the governments plan to kickstart the economy?