UK Unveils Multi-Billion Pound Economic Stimulus as Young Unemployment Looms

Strategic Insights -

The UK government, led by Chancellor Rishi Sunak, has announced a multi-billion pound economic stimulus package aimed at supporting businesses and young people struggling with the impact of the coronavirus pandemic. The scheme, dubbed the "Kickstarter" jobs fund, will provide 100 per cent of the national minimum wage up to 25 hours per week for a six-month work placement to anyone between the ages of 16 and 24 receiving Universal Credit. Companies will be able to top up the payments, with the aim of pushing them to hire some of the 700,000 young people claiming benefits.

Key Takeaways:

  • The Kickstarter jobs fund will support anyone between the ages of 16 and 24 receiving Universal Credit, covering 100 per cent of the national minimum wage up to 25 hours per week for a six-month work placement.
  • Companies will be able to top up the payments, with the aim of pushing them to hire some of the 700,000 young people claiming benefits.
  • UK ministers hope the fund will push companies to hire some of the 700,000 young people claiming benefits, a quarter of a million of whom have found themselves out of work since the start of the coronavirus lockdown.
  • The government claims the package is the biggest young unemployment package in decades and is part of a multi-billion pound economic stimulus.
  • The Chancellor has not ruled out measures including a cut in VAT for hospitality businesses and a voucher scheme to boost spending on the high street.
  • The Treasury has confirmed that the government will not raise income tax, national insurance, or VAT, despite the economic stimulus package.

Statistics:

  • 700,000 young people are claiming benefits, with a quarter of a million having found themselves out of work since the start of the coronavirus lockdown.
  • The government claims the package is the biggest young unemployment package in decades.
  • The coronavirus crisis has already added £120bn to public spending.
  • The UK economy is forecast to fall 11 per cent this year, but only if there is no large-scale second wave of coronavirus or another national lockdown.
  • The OECD estimates that one in seven people in the UK might be unemployed by the end of this year if a second wave of the pandemic washes over the country.

Sources:

  • "Chancellor to unveil 'Kickstarter' jobs fund to tackle youth unemployment"

by Paris Gourtsoyannis in the The Times

  • "UK economy faces longest recession since 1930s, OECD warns"

by the Organisation for Economic Co-operation and Development (OECD)

  • "Covid crisis: UK economy won't recover until 2024, BDO and Centre for Economics and Business Research say"

by accountants BDO and the Centre for Economics and Business Research