LONDON -- The British government and the Bank of England joined forces Thursday to provide further support to an economy facing a difficult winter after the imposition of new coronavirus lockdown measures.
Soon after the central bank increased its monetary stimulus by a bigger-than-anticipated $196 billion, the government extended its salary support program through March, a move welcomed by employers and employees in firms that have had to close as a result of the heightened restrictions and face depressed demand when they are allowed to reopen.
Later, Prime Minister Boris Johnson offered a slew of bleak virus-related statistics to explain the need for the tighter measures. His point was clear: The financial support is there -- follow the rules.
"I know many of you are anxious, weary and quite frankly fed up with the very mention of this virus," Johnson said at a news conference.
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The extension of the furlough program, which sees the government pay 80% of the wages of people retained by firms, up to $3,300 a month, came on the day that England returned to lockdown; the other U.K. nations -- Scotland, Wales and Northern Ireland -- already lived under heightened restrictions.
Like others in Europe, the United Kingdom has seen a sharp spike in new coronavirus infections recently. Johnson said the average daily number of new cases was now 22,398 against 9,716 a month ago. That's led to big increases in the number of people needing hospitalization, and in those dying. On Wednesday, the U.K. recorded another 492 virus-related deaths, the highest daily number since May, taking the overall death toll to 47,742, Europe's highest.
The Job Retention Scheme, which was introduced alongside the national lockdown in March and helped keep a lid on unemployment, was due to expire at the end of October and to be replaced by a less generous program. However, it was reinstated Saturday when the government abruptly announced another lockdown for England to last until Dec. 2.
The lockdown will see millions of workers going idle once again as it requires all nonessential venues such as pubs, restaurants, and stores selling items like books, clothing and sneakers, to close. Support for self-employed workers was also increased.
"It's clear the economic effects are much longer-lasting for businesses than the duration of any restrictions, which is why we have decided to go further with our support," Treasury chief Rishi Sunak told lawmakers.
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The extension was welcomed, as it relieves the pressure on firms in what would traditionally be the busiest time of the year -- the run-up to Christmas.
"Hospitality is facing a tough winter, so this enhanced support is crucial and will safeguard jobs and help businesses to plan for more certain future," said Kate Nicholls, chief executive officer of the U.K. Hospitality lobby group.
5.5 MILLION FURLOUGHS
The Bank of England estimates that the number of people on furlough will more than double in this month to 5.5 million. At the height of the program, around 9 million workers, or around a third of the workforce, were on furlough.
The government had for months balked at calls for an extension, arguing it wasn't its role to support every job forever. It was no doubt also concerned about the program's cost, at more than $52 billion already.
Though the furlough program prevented mass unemployment, the jobless rate has edged up from a four-decade low of 3.8% to 4.5% during the pandemic. On Thursday, supermarket chain Sainsbury's said it will shed around 3,500 jobs as part of plans to permanently close its meat, fish and deli counters, as well as some of its Argos standalone stores.
The extension came as the Bank of England warned that the British economy will contract a further 2% in the fourth quarter and faces an "unusually uncertain" outlook. However, it laid out hope that a recession -- widely defined as two straight quarters of contraction -- may be avoided.
Its nine-member policy-making panel increased the bank's bond-buying program to ensure banks carry on lending. The stimulus was bigger than the $130 billion anticipated in financial markets. The Monetary Policy Committee also unanimously kept the bank's main interest rate at the record-low of 0.1%.
EU PANEL'S FORECAST GRIM
Across the English Channel, the European Union's executive commission Wednesday lowered its forecast for the economic rebound from the pandemic next year and said the economy wouldn't reach pre-virus levels until 2023.
The regular autumn forecast foresees growth of only 4.2% in 2021 for the 19 countries that use the euro, instead of the previous estimate of 6.1%.
The downgrade comes as governments record increasing numbers of infections, sick people in hospitals and deaths, and as they reimpose some restrictions on businesses and activity.
"Output in both the euro area and the EU is not expected to recover its pre-pandemic level in 2022," the commission said Thursday in a statement accompanying the forecast.
Information for this article was contributed by Danica Kirka of The Associated Press.
