The new epidemic has posed a difficult problem for British Prime Minister Boris Johnson’s government, and how to solve this problem will set the tone for the economic performance of the UK in the next few years.
if massive support for employment and wages is withdrawn too early, the UK will fall into an unemployment crisis, which, like other risks such as brexit, threatens UK economic growth.
if the bail-out plan is extended as called for by opposition politicians, the result may be that Britons are reluctant to give up jobs that they may never return to, hindering the necessary corporate restructuring.
on the surface, both options are costly. The UK Treasury has so far paid nearly 35 billion pounds (US $46 billion) for Chancellor Rishi sunak’s pay subsidy scheme. But in the long run, mass unemployment or a lack of output in the workplace could be more costly and have a negative political impact on Johnson’s Conservatives.
because of the long blockade period, the situation in the UK is more extreme than in other regions. Most British companies were not allowed to return to work until July 4, while other countries lifted restrictions as early as may.
in June, more than a fifth of the British workforce was forced to temporarily lose their jobs, and it is not clear how many of them will be able to return to their jobs.
“it seems certain that the wage subsidy scheme has preserved a large number of ‘zombie jobs’,” Jonathan Portes, an economist at King’s College London, wrote in prospect magazine. “Constant destruction and job creation are an integral part of a dynamic economy.”