Thursday 9th July 2020 - 10:15 (BST)
GBP moved 1% higher against a majority of G10 currencies following yesterday’s £30bn stimulus package laid out by UK Chancellor of the Exchequer, Rishi Sunak. Initial market reactions were mooted as the government announced its latest plans to help stimulate the economy post-lockdown. However, overnight trading saw GBP rally - partly encouraged by the fresh round of spending.
Chancellor Sunak confirmed the current furlough scheme will end in October but offered a £1000 jobs retention bonus for businesses that retain staff up to January 2021. Emphasis was placed on youth employment, with a £2bn “kickstart” scheme to create jobs for 16-24 year olds. VAT and Stamp Duty cuts were also announced to help stimulate the service and housing sectors, whilst an innovative “eat out to help out” scheme garnered universal praise from the hospitality industry.
Including loans and guarantees, the government has now committed over £310bn to help reduce the economic impact of Covid-19. The latest spending also takes national debt over 100% of GDP for the first time since 1963, but Mr Sunak insisted it was “right” to increase spending and help avoid a deeper recession.
Despite the numbers, expectations remain high for Autumns full budget as the Chancellor will have a better understanding on the spread of Covid-19 and also more of a steer on Brexit negotiations.
