British Treasury chief Rishi Sunak on Wednesday is set to announce a 2-billion-pound program to create jobs for young people as the government tries to revive an economy battered by the COVID-19 pandemic.
Announcement of the funding, which will create government-subsidized minimum wage jobs for 16- to 24-year-olds, comes after Prime Minister Boris Johnson announced plans for a “New Deal” similar to the program President Franklin D. Roosevelt created to help the US bounce back from the Great Depression.
Sunak’s office released details of the youth employment program before a speech to Parliament in which he will outline the government’s updated spending plans. Analysts speculate that Sunak may also announce tax cuts to boost consumer spending, buoy the housing market and ease the burden on small businesses.
“Young people bear the brunt of most economic crises, but they are at particular risk this time because they work in the sectors disproportionately hit by the pandemic,” Sunak said in excerpts of his remarks released in advance. “We also know that youth unemployment has a long-term impact on jobs and wages and we don’t want to see that happen to this generation.”
The speech comes amid concern that the pandemic and a three-month lockdown may result in a lingering slowdown in the British economy. Though Sunak has organized emergency programs that have prevented millions of job losses, fears are growing about what happens as the programs wind down and expire in October.
While the economy has shown some signs of recovery after output plunged during the lockdown, economic production is still about 15% below its pre-recession peak, according to Kallum Pickering, senior economist at Berenberg Bank in London. Gross domestic product may not return to fourth-quarter levels until early 2023, he said in a note to clients.
“But with the market panic over, the virus mostly under control and the economy recovering, the case for blunt force has lessened somewhat,” he said. “Instead, expect Sunak to announce targeted measures to lift the flagging parts of the economy and those areas that may struggle under the continued social distancing measures.”