UK Shuts Pubs, Will Help Pay Workers' Wages Amid Pandemic

The U.K. will shut down the country’s pubs, defer value-added tax payments worth about 30 billion pounds ($35 billion), and help pay its citizen’s wages for the first time in the nation’s history as it faces the coronavirus pandemic.

Chancellor of the Exchequer Rishi Sunak announced the unprecedented plan Friday as he gave details of the government’s latest package of measures to support the economy through an economic shock that has swept the world and threatens to be worse than the financial crisis of 2008.

“I do accept that what we’re doing is extraordinary,” Prime Minister Boris Johnson told reporters in Downing Street on Friday. “We’re taking away the ancient inalienable right of the freeborn people of the U.K. to go to the pub.”

The closing of U.K. pubs, clubs and theaters as part of the government’s attempt to contain the virus will cost jobs -- not to mention impact social behavior. Downing Street has sought to make clear it is ready to step in: The state will cover 80% of the wages of workers who firms can’t afford to retain as a result of the crisis up to a total of 2,500 pounds a month.

Sunak warned he knew jobs were already being lost in the U.K. and said all employers in the country will be eligible for the program.

“To all those at home right now anxious about the days ahead, I say this: ‘You will not face this alone,” he said. “Now, more than any time in history, we will be judged for our capacity for compassion.”

Sunak’s package also includes:

• VAT payments for next quarter deferred, giving businesses a 30 billion-pound boost
• Unlimited 12-month, interest-free loans for businesses
• 7 billion pounds of additional welfare support, including an increase in universal credit payments.
• 1 billion pounds of support for renters
• Self-employed workers to get the equivalent of statutory sick pay

Sunak said the plan will be financed through extra borrowing. The Bank of England yesterday announced it was restarting its bond-buying plan in response to the crisis, with its 200 billion pounds of purchases mainly made up of gilts.

It’s been a baptism of fire for Sunak, who took control of the country’s purse strings just five weeks ago.

Nine days ago, he unveiled 12 billion pounds of measures to mitigate the effects of the outbreak on the economy. As evidence mounted that the crisis was snowballing, he unveiled a 350-billion pound stimulus package comprising government-backed loans, grants and tax cuts for struggling companies.

While Sunak had repeatedly said he will do “whatever it takes” to protect jobs and the economy, critics had pointed out that the huge stimulus he announced earlier this week protected businesses, but not their workers. That led to Friday’s proposals, aimed squarely at preserving jobs.