by Namrata Majithia 9th July 2020
9th July 2020 UK Political, Economic and Social Update during Covid-19

9th July UK Economic Update  – ‘Dishy’ Rishi serves up some new dishes

Yesterday’s mini-budget saw the British Chancellor Rishi Sunak pump a further £30 billion into the economy using a variety of highly targeted measures to kick start the housing market and the food and hospitality sectors, which between them employ millions of British workers.

This takes the total bill for Sunak’s interventions throughout the pandemic — £188.7 billion — well above the £140 billion the British government spent on health last year. And it will all have to be paid for at some stage. Here are the details:


VAT is slashed to 5 per cent for the hospitality sector.
From 15th July VAT rates will be reduced from 20 per cent to 5 per cent on all sales of hot food, accommodation and entertainment venues like cinemas and theme parks in England. This cut will remain in place for six months and cost the Exchequer about £4 billion. The chancellor said about 150,000 businesses would benefit.


Eat out to help out scheme.
Anyone going to eat in a restaurant or pub between Monday and Wednesday during August can get up to 50% off their bill up to a maximum of £10 per customer. Businesses will then be able to claim this money back from the government within five working days.  These measures should help kickstart the UK’s enormous restaurants sector.


Temporary cut in stamp duty.
No stamp duty will now be payable on properties costing up to £500k, saving buyers an average of £4.5k per transaction. This temporary stamp duty cut will begin immediately and last until March 31 2020. The present stamp duty threshold is £125,000 with a rate of 2% on properties up to £250,000 and 5% on the portion of the cost thereafter.  This should stimulate business for real estate agents, lawyers and the furniture and homewares sector.


New £9 billion job retention scheme
Underway now here in the UK is a flexible and gradual winding down of the furlough scheme which ends on 31st October, balanced by a new jobs retention bonus in which businesses will be paid £1,000 to retain furloughed staff.

Companies who bring back furloughed workers will be paid a £1,000 bonus per employee at the end of January 2021. The chancellor said if all furloughed employees were brought back into work this would cost the Treasury £9 billion.


£2 billion “kickstart” work placement scheme
Up to 300,000 16 to 24-year-olds will be funded by the government for six-month work placement schemes worth about £5,500 each. Businesses will receive £1,000 per employee they take on for a minimum of 25 hours per week at the level of the national minimum wage


£2,000 apprenticeship bonus
Firms will be paid a bonus of £2,000 for each new apprenticeship they create in the next six months. There will be an additional bonus of £1,600 for every apprentice who is hired over the age of 25. There will also be a £1,000 bonus for each new trainee, aged 18 or 19, brought in by companies.


£3 billion for ‘green’ grants
A focus on green measures will see a £3bn investment available for decarbonising housing and public buildings. Vouchers worth between £5k and £10k will be available to homeowners to retrofit homes with insulation, helping to cut carbon emissions, and £1bn is being allocated to make public buildings greener.

Households will be able to apply for vouchers worth up to £5,000 for home insulation. This will cover up to two thirds of the total cost of the work. For low-income households grants of up to £10k will be available covering 100% of the work.


9th July UK Political Update – Glimmers of hope in Brexit negotiations

While the news here is full of fresh measures to kick start the economy, one-to-one Brexit negotiations quietly got under way again this week in London between Michel Barnier and David Frost.

The prime minister’s chief Brexit negotiator invited Mr Barnier for dinner in Downing Street on Monday night where he was served halibut — the largest flat fish caught in British waters.

On Tuesday the two teams met in Whitehall for further rounds of informal talks designed to bridge the differences that stand in the way of a deal.

Boris Johnson has said he wants to conclude an outline agreement by the end of this month but so far neither the UK nor the EU has moved substantially on the key areas of disagreement.

At the end of last week’s talks in Brussels, which broke up early, EU officials said the UK needed to make concessions on so-called “level playing field” issues and fishing rights if there was to be a deal. This week’s round is seen as important by both sides to scope out areas of compromise.

The Times reported on Tuesday that, giving evidence to the House of Lords European Union committee, Mr Barnier hinted that the EU was ready to unilaterally give access to some UK financial companies as part of any deal.

While the EU has always claimed such “equivalence” decisions were not a matter for negotiation with the UK, Mr Barnier suggested for the first time that they were linked to an overall settlement. “We are ready to grant equivalence,” he said. “The time for decisions is in the autumn, in good time, in the global context of our negotiations on many subjects with the UK.”

Mr Barnier also hinted that the EU might be prepared to compromise on its insistence that the European Court of Justice must have a role in policing the agreement between the two sides. The EU’s chief negotiator said that while the court was the only body that could rule on matters of European law, it should be possible to address the government’s concerns about its jurisdiction in the UK.

“I do not imagine that it would not be possible to find some creative solution to deal with these issues,” he said. “We are open to being creative so that we keep various sides happy.”

Mr Barnier warned that alongside negotiations for a deal, the EU was reassessing its plans for a potential no-deal Brexit and would be publishing further guidance for European citizens and businesses in the coming weeks.

Mr Barnier said the EU was “doing everything to succeed” in reaching an agreement “but not at any price”. “We are engaging constructively and I look forward to equivalent engagement from the UK this week,” he said.


9th July UK Social Update – Portugal’s shock at exclusion grows

The recent exclusion of the Portuguese mainland from the UK’s newly issued travel list of ‘green’ and ‘amber’ countries has caused consternation in the Portuguese government.

While the Azores and Madeira are classed as ‘amber’ in the list, meaning that British visitors to those areas do not have to self-isolate for 14 days on their return to the UK, the key tourist areas of Lisbon, Porto and the Algarve are facing a very bleak few summer weeks without their customary influx of British visitors.

Approx. 2.8m British holiday makers visit Portugal every year, so the Portuguese Minister for Tourism and the senior team at the Portuguese Tourist Office are all extremely keen that Portugal (mainland) is included in the UK’s ‘amber’ travel list as soon as possible.

To this end, strenuous efforts are being made by the Portuguese authorities to ensure the country is included in the UK government’s list by the time of the next review on 27th July.  They have put together an excellent factual presentation (attached) to reassure visitors that Portugal is an extremely safe destination.

The all-important R rate in Portugal is now mostly below the magic figure of 1.   In the first five days of July, Portugal’s R number stood at 0.98.

At this week’s regular Portuguese government meeting with its health technicians at Infarmed, epidemiologists guaranteed that contagion is stabilizing in the five regions of Lisbon and Vale do Tejo currently most affected by the Covid-19 pandemic.

Lisbon, which in the first five days of July had an average of 250 to 300 cases, now has an R rate of 0.97.

The Algarve is the region with the lowest risk of contagion R: 0.77.

In Alentejo, that value also dropped and is now R 0.86.

The North and Center areas have higher values. In the North, the virus transmission rate is the highest at R 1.09. In the Center, this figure is at R 1.08.

In Portugal as at 1 July 2020, there were 42, 454 confirmed cases, with 1,579 deaths.

Portugal is one of the countries (6th in Europe) that has done the most Covid-19 tests per % of population – namely +1,190,000 tests, meaning 10% of the population are already tested.  Only 3.67% of tests showed positive results.

The Algarve has had 632 cases out of a population of 438,635.  So a very low 0.14% infection rate in the population.

To see the latest government update on Portugal’s corona virus stats, click here.