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Sunak pledges 30 billion pounds to stem unemployment crisis

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Britain’s finance minister has promised an additional £30 billion to head off an unemployment crisis, funnelling money to employers, homebuyers and beleaguered hospitality firms to drive a recovery, write Andy Bruce and David Milliken.

Rishi Sunak (pictured), who was already on course to take state borrowing to World War Two levels with £133bn of initial coronavirus emergency measures, said he would return the public finances to a sustainable footing over the medium term.

But the former Goldman Sachs analyst promised to press on with using the power of the state to shore up the economy, which has forced his Conservative Party to suspend its traditional pro-market instincts.

“I want every person in this House and in the country to know that I will never accept unemployment as an unavoidable outcome,” Sunak told parliament on Wednesday.

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The world’s sixth-biggest economy shrank by 25% in March and April and could be heading for its biggest fall in 300 years in 2020, with the unemployment rate on course to more than double to about 10%, according to official projections.

Under a new bonus plan, employers will be paid 1,000 pounds ($1,256) after the furlough scheme expires at the end of October for every worker who returns to their job, provided they are kept on through to the end of January.

With more than 9 million jobs covered by the scheme, the cost of the bonuses could be as much as £9.4 billion pounds.

To help hospitality and tourism, hampered by social distancing rules, Sunak announced a cut in value-added tax for the sector to 5% from 20% for six months.

People eating out in August between Monday and Wednesday will receive a 50% discount of up to 10 pounds each, paid for by the government.

Shares in pubs and restaurant firms rose.

With close to 45,000 confirmed coronavirus-linked deaths, Britain has been hit harder by the pandemic than any other European country, leaving many people reluctant to return to life as before.

Sunak’s plan includes a £2bn ($2.5bn) fund to create six-month work placement jobs for unemployed 16-24 year-olds and more government-funded apprenticeships.

A further £3bn will be spent on improving the energy efficiency of homes and public buildings, which would support more than 100,000 jobs.

The £30bn cost of the plan includes around £5.6bn in accelerated infrastructure spending announced last week by Prime Minister Boris Johnson.

Some employers had urged Sunak to go further by cutting the social security contributions they must pay for their workers.

In a bid to breathe life into the housing market and the broader economy, Sunak raised the lower threshold for a tax on property purchases to £500,000, four times its current level, with immediate effect until 31 March.

Economists said the plan was unlikely to accelerate Britain’s recovery from the crisis.

“Overall this wasn’t a massive fiscal package, with other countries like Germany announcing much larger fiscal packages,” Jing Teow, an economist at PwC, said.

As well the uncertainties about how the pandemic will proceed, Sunak has to contend with the possibility London and Brussels fail to agree a post-Brexit trade deal by the end of this year.

“The chancellor is likely keeping his powder dry until the autumn,” Teow said, referring to a formal budget statement Sunak is due to deliver in late 2020.

ECR Group

Italian MEP Vincenzo Sofo joins the ECR Group

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The European Conservatives and Reformists Group in the European Parliament has decided to take on Italian MEP Vincenzo Sofo as a new member.

Mr Sofo was elected to the European Parliament in 2019. He was one of the three Italian candidates suspended pending the exit of the British Members. On February 1st 2020, Mr Sofo officially took his European Parliament seat. The ECR Group now holds 63 seats in the European Parliament.

After the meeting, ECR Co-Chairman Raffaele Fitto said: “I’d like to welcome Mr Sofo to our Group. He is a trained and competent colleague who has made a political choice consistent with his political path. We are sure that Mr Sofo MEP will be able to make a decisive contribution to the work of our Group, and to our alternative vision of the future of Europe, that is, a community of homelands and nations that cooperate in respect of our different identities and peculiarities.”

ECR Co-Chairman Ryszard Legutko said: “The decision of Mr Sofo shows that our political project, together with the strength of our ideas and our values, is credible and attractive, and from today even stronger and more able to give concrete answers to our citizens in terms of well-being, wealth and security.”

Following the decision, Sofo said: “The European Union is going through one of the most difficult periods in its history, not only from an economic point of view but also from a social and cultural point of view. Surely, it must be profoundly changed to be preserved. Considering the political forces grouped in the European Conservatives and Reformists, they are the ones most able to carry out this task.

“The Conference on the Future of Europe will be a crucial appointment for our Continent and the work that conservative forces will be able to do to correct the mistakes of the European project will be fundamental to straightening its path by strengthening our Nation states and values that have forged its spirit.”

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Brexit

Brexit causing supply problems for small UK manufacturers: survey

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New post-Brexit trade restrictions have pushed up the cost of parts and raw materials for two thirds of small British manufacturers surveyed last month, and a majority reported some level of disruption, writes David Milliken.

The survey of nearly 300 firms, by consultants South West Manufacturing Advisory Service (SWMAS) and the Manufacturing Growth Programme, a government and European Union-funded initiative providing support to small firms, adds to the picture of disruption from new customs checks that came into force on Jan. 1 for goods trade with the EU.

“Price hikes in the supply chain have been immediate, and we are hearing tales of lead times being extended on raw materials,” said Nick Golding, managing director of SWMAS.

Some 65% of manufacturers reported higher costs, and 54% said they had greater difficulties exporting goods to the EU.

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Around a fifth of manufacturers thought they might gain from customers bringing work back to Britain from the EU.

Britain’s government has said many of the difficulties are “teething troubles” and last week said it would make 20 million pounds ($27.7 million) available to help small firms get used to the new rules. Further restrictions are due to take effect later this year.

Earlier this month the Bank of England forecast that Brexit-related trade disruption would reduce economic output by 1% during the current quarter - equivalent to about £5 billion - and it expects trade to fall by 10% in the long term.

Brexit supporters say Britain will gain long-term advantages by setting its own trade rules with countries outside Europe, as well as from greater control over domestic regulation.

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Brexit

UK says it's not yet at 'gin and tonic' stage with EU after Brexit

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Britain said on Tuesday (9 February) its relations with the European Union after Brexit had been problematic due to differences over everything from vaccines and Northern Ireland as well as a row over the status of London’s top diplomat in Brussels, writes .

The United Kingdom left the EU in January last year, and fully exited the bloc’s economic orbit on 31 December 2020, though the European Commission sent shockwaves through the British province of Northern Ireland last month by threatening to restrict vaccine exports through Ireland’s land border.

“It has been more than bumpy to be honest in the last six weeks: I think it has been problematic and I hope we’ll get over this,” Prime Minister Boris Johnson’s EU adviser, David Frost (pictured), told a House of Lords committee.

“The EU is still adjusting somewhat to the existence of a genuinely independent actor in their neighborhood,” he said. “It is going to require a different spirit, probably, from the EU.”

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Michael Gove, Johnson’s top minister on Brexit affairs, compared the relationship to turbulence on an aircraft after takeoff.

“You sometimes get that increased level of turbulence, but then eventually you reach a cruising altitude and the crew tell you to take your seatbelts off and enjoy a gin and tonic and some peanuts,” Gove said. “We’re not at the gin and tonic and peanuts stage yet, but I’m confident we will be.”

Britain has been seeking to etch out concessions from the EU since the Commission sought briefly to prevent vaccines from moving across the open border between EU-member Ireland and Northern Ireland. The Commission cited a shortfall of vaccines promised for the EU, but reversed its move after an uproar.

Gove, who is due to meet Commission Vice President Maros Sefcovic on Thursday (11 February), said he would press the EU for practical changes on the ground to the implementation of the protocol governing Northern Ireland’s post-Brexit trade with Ireland.

“I want the protocol to work and I think there are ways in which we can do that by making practical changes on the ground,” Gove said.

The Commission informed London that the EU would need more time to ratify the 24 December 2020 deal on future British-EU relations and Frost scolded the bloc for what he said was its restrictions imposed on the activities of Britain’s envoy to Brussels.

“I’m even more sorry there’s a restriction on the activity of our ambassador and some of his team in Brussels,” Frost said. “I don’t think it is quite tit-for-tat because we are not putting any restriction on the operation of the EU mission in London.”

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