UK budgets to eat its way out of recession with economic stimulus

The British government has unleashed a £30bn economic stimulus for the country to try to eat away at the coronavirus slump.

The British government has unleashed a £30bn ($54bn) economic stimulus for the country to eat away at the coronavirus slump.

Delivering a mini-budget in the House of Commons, Chancellor of the Exchequer Rishi Sunak on Wednesday night called on people to “eat out to help out”, giving Britons half-priced restaurant meals in August to get newly re-opened eateries back on their feet.

Under the £500m meals scheme, taxpayers are subsidising restaurant bills by up to £10 a head for every dining experience — repaid to the businesses by the government from forgone Valued Added Tax within five days.

It is just one several plans to reverse the 25 per cent plunge in GDP the country has suffered during the 15-week COVID-19 lockdown.

The plunge in GDP, the worst in more than 300 years, has erased 18 years of progress.

Mr Sunak said the hospitality boost was designed to “get customers back into restaurants, cafes and pubs and protect the 1.8 million people who work in them”.

Restaurants, pubs and cafes were allowed to open only from last Saturday, with strict coronavirus measures in place.

Mr Sunak has also eliminated stamp duty on homes sold for less than £500,000 until March, provided bonuses until January to companies that take back furloughed staff as opposed to making them redundant, slashed VAT from 20 per cent to 5 per cent for the hospitality industry until January and provided £2bn in “kick-starter” wages for young people for six months.

In a make-work scheme, council homes will be insulated. “People need to know that although hardship lies ahead, no one will be left without hope,” he said.

In total, the measures have been costed at £30bn, and come on top of £280bn already promised to keep businesses and nine million furloughed workers afloat over the past four months and into the short-term future.

Of that amount, the government has spent £160bn on public services, deferral of VAT and other taxes, and extra business loans or guarantees. The government has not even begun to try to offset its spending spree to resuscitate businesses forced into a lockdown that began five days after peak infection rates.

Mr Sunak said one main fear was the dramatic economic plunge would leave a generation behind. “Governments, much less people, rarely get to choose the moments that define them. What choice there is comes in how we respond,’’ he said.

As of Wednesday, Britain had a coronavirus caseload of 288,511 and had suffered 44,602 deaths