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Extending UK furlough would trap people in false hope, finance minister says

·2 min read

By Andy Bruce and Kate Holton

LONDON (Reuters) - Extending Britain's furlough scheme would leave some workers trapped in false hope that they could return to their jobs after the coronavirus pandemic, British finance minister Rishi Sunak said on Friday.

With redundancies mounting, opposition politicians and think tanks have said Sunak should extend the Coronavirus Job Retention Scheme - due to expire at the end of October - until the economy is strong enough to support more at-risk workers.

Sunak has said there is no question of a wholesale extension of the programme and he was backed up by Bank of England Governor Andrew Bailey on Thursday.

"It's wrong to keep people trapped in a situation and pretend that there is always a job that they can go back to," Sunak told BBC Radio Scotland.

He said the government had taken action to provide people with new opportunities, including apprenticeships and training during what "is unquestionably going to be a difficult time".

Last week the National Institute of Economic and Social Research, a major think tank, said closing the furlough scheme early would be a "mistake" that would cause surging unemployment.

Extending the scheme would largely pay for itself by averting job cuts, NIESR said.

The BoE said it estimated 7.5 million workers had benefited from the furlough scheme at its peak, and that 4 million had now returned to work, while 3.5 million were still on furlough.

Governor Bailey said on Thursday that some parts of the economy would no longer be viable once the fallout of the pandemic clears - with hospitality and leisure looking especially vulnerable.


Major British companies have already announced tens of thousands of redundancies.

Bailey said on Thursday that the central bank's projection for an unemployment rate of 7.5% this year was a "very bad story" for the British public, and warned that it could turn out worse than that.

Sunak told Times Radio that Britain cannot sustain the level of borrowing it has undertaken to support the economy through the pandemic and warned of difficult decisions ahead.

"The appropriate thing is to be bold and decisive in the response and try and protect as much of the economic capacity we have as possible. We can borrow this year to do that," Sunak said.

"That's not something we can or should sustain."

(Editing by Guy Faulconbridge)