It’s been a rotten year so far with the pandemic closing shops, high streets, businesses and any number of other normalities for most of us. With businesses being shut there’s been a large hit and shock to the economy, whilst the government worked out how to respond most effectively, and many were forced indoors for months at a time.
Now that we’re well into July, things are certainly looking to have taken a much more encouraging turn as life starts to slowly return to normality. Last week it was announced that gyms, swimming pools and leisure centres will soon join shops, pubs and restaurants in re-opening, offering a huge and needed boost to the economy.
With the prolonged shut down now coming to an end, there’s quite strong evidence that the pent-up demand caused by the inability to spend has taken the economy with a vengeance, with barbers, hairdressers, estate agents and pubs all seemingly struggling to cope with the surge in demand.
Having that said, we aren’t quite leaving lockdown entirely, but just moving into a new phase where caution is required, and businesses need a little extra support, prompting the chancellor into action.
Rishi Sunak, still a relatively new face in the cabinet, has been widely praised for his response to the pandemic and is seen as a rising star in the Conservative government. So with his reputation on the ascendancy, what did he actually announce last week?
The first thing, and perhaps most eye-catching, was the treasury’s promise of a £1,000 bonus to any business that continued to employ furloughed staff beyond January 2021, with the payment being made that same month.
The stipulation was that workers must be earning over £520 per month and must be in employment until the payment is due. The move was praised by many as helping to save as many jobs as possible.
Secondly was a six month VAT cut for restaurants, hotels and attractions, with the rate reduced from 20% to just 5% until January 2021. Food and non-alcoholic drinks in restaurants, pubs and cafes, as well as hot takeaway food will be covered as well as accommodation in hotels and B&Bs. Admission to attractions such as theme parks and cinemas are also included.
These moves have been widely praised as ambitious and should have the scope to save large swathes of industries worth billions to the UK economy, following another announcement last week that a rescue fund had been set up for the UK arts and theatres, which was also badly needed.
Perhaps the most eye-catching of the chancellor’s announcements was reserved, however, for property where Sunak announced that the threshold for stamp duty on residential property in England and Northern Ireland will rise from £125,000 to £500,000 until March of next year.
This will save house buyers, as well as buy-to-let landlords and investors, thousands over the course of the rate cut, and is seen as an extremely positive move for the industry.
It will have the output of driving demand, and should keep prices stable and even ensure they keep rising throughout this economic shock, which can only be seen as good news by the entire industry. This should be received as a large vote of confidence and step forward.
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