Chancellor Summer Statement: All about jobs

Chancellor Summer Statement: All about jobs

What’s new - The Chancellor of the Exchequer noted that after an initial phase of protection, nine million workers have benefited from the furlough scheme. The government is now moving to the next stage which is to support, create and protect jobs. A phase that could cost around £30bn so just over 1% of GDP.

  1. Support people to find jobs:


2. Create jobs:


3. Protect existing jobs:

Market Reaction – Fairly muted. The package is of moderate size and in line with what was anticipated. Extra issuance might be needed to fund the schemes but pressure on gilt yields should remain limited. Most key measures had been shared prior to the announcement so sterling already priced in the changes with a small rally in the days leading up to the announcement.

Our Take – A decent set of temporary measures with room to do more if the economy does not follow the expected recovery trajectory.

  1. All about jobs: The focus of the new measures is to support, protect and create jobs. It strikes a balance between boosting demand and mitigating lasting scars to the supply side of the economy. The emphasis has shifted away from broad-based guarantees to measures to strengthen the labour market.

  2. A targeted approach: Importantly, the focus is on engineering the biggest “bang for the buck” by supporting sectors that are big employers and/or that have been disproportionately affected by the crisis – ranging from housing and construction to hospitality, entertainment and tourism.

  3. An eye on the public finances – eventually: There is a degree of optionality in part of these fiscal measures. To reduce their cost and allow some flexibility to recalibrate the key parameters, the stamp study and VAT cuts, just like various aspects of the job schemes, are temporary. We’d expect more on the long-term plan for the public finances in the Chancellor’s Autumn Statement.


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