Rishi Sunak made the staggering policy announcement in the House of Commons during his “mini-budget”. Rishi Sunak set out a £2 billion emergency package of support to help prevent youth unemployment in the wake of the coronavirus crisis. The Chancellor also used his mini-budget to set out a scheme of subsidised work placements as part of a “plan for jobs”. The Conservative frontbencher confirmed a stamp duty holiday to temporarily exempt the tax on the first £500,000 of homes purchased in England and Northern Ireland in a bid to revive the housing market.
Speaking before the statement, the Institute of Fiscal Studies director Paul Johnson said some of the extra spending may turn out to be permanent.
“He is going to be worrying about the cost of all this, but he is not going to be worrying about it this year and possibly not next year,” he told BBC’s Today programme.
“But in two or three years’ time – partly because the economy will be smaller than we expected and tax revenues will be lower, and partly because I think significant chunks of this extra spending will be permanent – at some point, he is going to have to come back and pay for this.”
Ahead of the announcement, Mr Sunak said: “Young people bear the brunt of most economic crises, but they are at particular risk this time because they work in the sectors disproportionately hit by the pandemic.
“We also know that youth unemployment has a long-term impact on jobs and wages and we don’t want to see that happen to this generation.”
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FTSE 100 LIVE: Rishi will deliver a statement in the Commons
16.15pm update: Wall Street looking ahead – expert
Wall Street appears to be “looking ahead to 2021 earnings” an expert has claimed.
“Wall Street is looking ahead to 2021 earnings and pretty much ignoring 2020,” said Sam Stovall, chief investment strategist at CFRA Research in New York.
15.55pm update: Dow Jones and S&P 500 surges
At 10:05 am ET, the Dow Jones Industrial Average was up 196.92 points, or 0.76 percent, at 26,087.10, the S&P 500 was up 23.65 points, or 0.75 percent, at 3,168.97.
Allstate Corp slipped 2.1 percent and Levi Strauss & Co fell 6.9 percent.
15.40pm update: US stocks rise on rebound hopes
US stocks have risen in rebound hopes despite a surge in coronavirus cases across America.
Safe-haven gold rose more than 1 percent as the number of confirmed US cases surpassed 3 million.
“We expect the tug of war between better economic data and concerns over rising COVID-19 cases to continue through the month unless we get better daily virus numbers, and/or news on a vaccine,” said Art Hogan, chief market strategist at National Securities in New York.
Rishi Sunak speaking in the House of Commons
14.20pm update: Sunak issued warning after Wednesday’s announcement
The Chancellor has been issued a warning after he announced various packages to help the UK remerge from the coronavirus crisis.
Matthew Germain, head of environment, at law firm Osborne Clarke, said: “Announcements on the £2billion green homes grant and the £1billion funding for energy efficiency in the public sector are very positive from a UK decarbonisation perspective.”
He added: “On the face of it, what has been announced today seems straightforward and clear and for that many key stakeholders, like product suppliers, house builders, energy companies and funders, will be pleased.
“The challenge and potential downside will come if demand quickly eats up the central budgets and creates a temporary boom which can’t sustain itself. The government needs to be in energy efficiency for the long haul.”
13.55pm update: Chancellor faces further challenges ahead
Rishi Sunak has been warned he faces further challenges ahead after his ‘Summer Statement’.
Mike Hodges, head of private wealth and partner at top 20 accountancy firm, Saffery Champness, said: “Against a backdrop of mounting public debt it was a bold move from the Chancellor to spend again.
“There was a huge focus on young people and encouraging businesses to support people into work, or back into work following furlough.”
He added: “The Chancellor will have to balance providing the right reliefs to stimulate economic recovery with raising taxes or cutting back on other reliefs to pay for the very significant investments made in recent months and if the Chancellor is to succeed in, in his words, putting the country’s finances back on a sustainable footing.”
13.45pm update: Rishi praised for mini budget
Kush Rawal, Director of Residential Investment from Metropolitan Thames Valley Housing, said: “We welcome the Chancellor’s stamp duty holiday, which makes shared ownership homes an even more attractive option for people looking to own their own home.
“Removing stamp duty from almost all initial share purchases means that key workers will be able to buy a shared ownership home with as little as two months of rent as their deposit.”
13.23pm update: Rishi Sunak mocks Labour’s lack of a plan
The Chancellor took a swipe at the Labour Party’s lack of a plan to deal with the coronavirus crisis.
Shadow chancellor Anneliese Dodds was left raging by the swipe.
13.18pm update: Labour Party warns response must ease people’s fears
The shadow chancellor welcomed the Government’s new economic measures but said the public health response must ease people’s fears.
Anneliese Dodds said: “The best the Government can do to boost demand is to give consumers and workers the confidence and psychological security that they can go out to work, to shop, and to socialise in safety.
“So please Chancellor work with your colleagues so the public health response catches up with that operating in other countries.”
13.09pm update: Shadow chancellor Anneliese Dodds responds to Sunak
Shadow chancellor Anneliese Dodds said Labour acknowledges the Government has had to make big decisions.
Ms Dodds said: “Our country has been through a great deal over these past few months.
“Hundreds of thousands have wrestled with this terrible disease. For many months people have had to go without being able to embrace their loved ones even to say goodbye.
“Tens of thousands have died. Our NHS, social care and other workers have made extraordinary sacrifices, we owe them so much.
“The Government has had to take big decisions too, we acknowledge that, but today should have been the day when our Government chose to build a bridge between what has been done so far and what needs to be done to get out economy moving again.”
13.05pm update: Chancellor announces unprecedented plan to get country back into restaurants, cafes and pubs
Chancellor Rishi Sunak also announced new measures to help get customers back into restaurants, cafes and pubs.
He told the Commons: “I can announce today that, for the month of August, we will give everyone in the country an ‘Eat Out to Help Out’ discount.
“Meals eaten at any participating business, Monday to Wednesday, will be 50 percent off, up to a maximum discount of £10 per head for everyone, including children. Businesses will need to register, and can do so through a simple website, open next Monday.
“Each week in August, businesses can then claim the money back, with the funds in their bank account within five working days.”
13.02pm update: Chancellor Sunak comments on UK’s response
Chancellor Rishi Sunak said the Government’s response was a question of “values” not just economics, concluding: “We will not be defined by this crisis, but by our response to it.
“It is an unambiguous choice to make this moment meaningful for our country in a way that transcends the frustration and loss of recent months.
“It is a plan to turn our national recovery into millions of stories of personal renewal.”
12.55pm update: Rishi Sunak makes stamp duty change
The Chancellor announced the UK would increase the threshold of stamp duty to half a million points.
Mr Sunak said it would be a temporary increase until March 31 next year.
12.50pm update: Rishi Sunak unveils £9billion policy
The Chancellor announced a £9billion policy to bring people back from the furlough scheme which is expected to end in October.
The ‘Jobs Retention Bonus’ will go to employers who bring people back from furlough and keep them on until January.
If they do, employers will get £1,000 for each staff member, which could cost the country as much as 9 billion pounds.
12.45pm update: Rishi Sunak reveals cost of pandemic
The Chancellor said the UK has spent £49 billion to support public services since this crisis began.
Mr Sunak made the announcement in the House of Commons.
12.35pm update: Rishi Sunak addresses the Commons
The Chancellor updated the House of Commons on the next plans to manage the coronavirus crisis.
Mr Sunak said: “This crisis has highlighted the special bond which holds this country together.
“Millions of people in Scotland, Wales and Northern Ireland have been protected but the UK Government’s interventions – and they will be supported by today’s plans for jobs.
“No nationalist could ignore the undeniable truth – this help has only been possible because we are a United Kingdom.”
11.05am update: 90 MPs expected to quiz Rishi in the Commons
Around 90 UK MPs are expected to quiz Rishi Sunak as he lays out his coronavirus recovery plan.
Most ministerial statements usually last around 10 minutes, but Mr Sunak’s is expected to last longer today.
It will then be followed by MPs asking questions.
10.45am update: BBC’s Laura Kuenssberg warns of Tory unease
BBC News political editor Laura Kuenssberg warned Conservatives are worried Rishi Sunak is “turning Labour-light” ahead of the Chancellor’s budget announcement.
She said: “There are nerves on that. There are some people who argue that this level of subsidy and this level of intervention in the economy basically means that the Tories are turning into Labour-light.
“But when you think of is it radical enough, it’s whether or not there are the imagination and the fresh ideas to look at this as a historic moment where a whole idea, a big bang idea, would actually emerge.
“And it just doesn’t seem that that has been the case so far.
“But one of his colleagues told me yesterday that Rishi Sunak is somebody who likes to underpromise and then overdeliver, which is not that common in politics these days.
“So we’ll have to see what he actually comes up with at the dispatch box but so far most conversation with people in and around the Treasury is that this will be a significant and expensive shocking list. But not necessarily something that will make our listeners drop their toast.
Anneliese Dodds speaking in the Commons
10.30am update: Markets dip ahead of Rishi Sunak’s speech in the Commons
The FTSE 100 saw a minor slip ahead of Rishi Sunak’s statement in the Commons.
The markets dipped from 6,202.19 at just before 10am, to 6,160.18 at 10.25am.
The FTSE 100 opened at 6,189.90 and has hit a high of 6,208.43 this morning.
10.00am update: European shares hit by rising virus cases
European shares were hit on Wednesday due to surging coronavirus infections across the globe.
The pan-European STOXX 600 fell 0.4 percent, with banks travel & leisure and energy companies dragging the main index lower.
Finland’s Nokia slumped 7.5 percent to the bottom of the STOXX 600 on concerns that the company was losing the business of a US client.
9.30am update: Rising cases in US impact markets
Rising cases of the deadly coronavirus in the US have impacted markets across Europe, one expert has said.
“European markets have continued to look soft this morning on concern that rising cases in the US across the southern states could stall the recovery there,” said Michael Hewson, chief market analyst at CMC Markets.
9.15am update: Markets unsteady over coronavirus second wave
Fears of a coronavirus second wave are impacting the markets, an expert has said.
“It is impossible for investors not to grow weary and eventually, at some point, fall prey to the endless drip of negative COVID-19 stories and how the secondbwave virus will crush the market,” said Stephen Innes, chief global market strategist at AxiCorp.
“Despite the lack of market participation, it certainly feels like we are gradually morphing from the view of a fragile recovery to one of full-bore scepticism.”
8.45am update: German bond yields above 1-week low
Yields of German 10-year government debt edged 2 basis points lower to -0.477 percent, just above a one-week low of -0.495 percent.
It comes ahead of Angela Merkel travelling to Brussels to discuss the EU’s recovery fund from the coronavirus crisis.
7.30am update: Asian shares waver with coronavirus
Asian shares struggled on Wednesday amid an increase in coronavirus cases across the globe.
Chinese shares flipped between green and red through most of the day and were last up 0.9 percent.
Australian shares ended 1.5 percent lower on renewed fears about the pandemic after a rise in cases in the country’s second biggest city.
New Zealand finished 0.3 percent lower while South Korea was off 0.2 percent.
7.00am update: US stocks plummet overnight
US stocks plummeted overnight, halting a five-day winning streak driven by better-than-expected economic data.
The declines come as coronavirus cases across the US soar, halting investors hopes of a global economic recovery.
“It will be important to watch the number of US deaths in coming weeks and whether greater questions will be asked about the extent of necessary restrictions,” NAB economist Tapas Strickland said.
Second-quarter earnings season will begin in earnest from next week.
Today marks an end to the five-day winning streak by the benchmark S&P 500 index, its longest this year and driven by better-than-expected economic data.
Additional reporting by Grace MacRae