Chancellor expected to extend furlough until May

Chancellor Rishi Sunak is expected to announce a further extension to the government’s furlough scheme until May in his Budget speech next week. 

According to The Times, the move is expected after Boris Johnson promised not to “pull the rug out” from businesses when restrictions eventually begin to ease under his new reopening roadmap. 

The paper also cites government sources that following the May extension, the scheme will begin to be gradually wound down. It is thought that Sunak is also looking to reinstate a scheme that will see a one-off payment given to businesses that bring back furloughed workers.

The latest furlough figures from the ONS showed that as of the 31 December 2020 over 3.8 million people were thought to be furloughed.

The news comes after it was reported earlier this week that the chancellor was also planning to raise corporation tax in the upcoming budget to pay off the estimated £400bn borrowed by the UK throughout the pandemic.  

According to The Financial Times, the alleged move has sparked uproar among business owners who claim they are still struggling with the economic impact of Covid-19.  

However, it is believed the Sunak sees the decision as a “matter of fairness”, with the chancellor holding the view that companies have benefited from millions of taxpayer support throughout the ongoing crisis. 

Sunak, who was the brains behind business rates relief and other Covid aid, has reportedly told Treasury officials that a rise in corporation tax would still allow Britain to hold a competitive position with other G7 countries. Currently corporation tax is set at 19%.