Thread by @TorstenBell

Autumn Budget off, crisis mini-Budget on (tomorrow)

Good the Chancellor is moving swiftly after PM ramped up covid restrictions yesterday - measures to save lives should be accompanied by the measures that help save livelihoods (less excuse than in March for gaps between the two)

The Chancellor's tasks? Enable us to do what is necessary to suppress the virus, while also suppressing the (now sadly inevitable) rise in unemployment

That doesn't mean just repeating what we did back in the Spring - because we're not putting the whole economy on ice any longer (and because the hopes that we were dealing with a short sharp shock are long gone)

Policy response now needs to be targeted at where the pain is now focused - hospitality and leisure where 4 in 10 workers were still furloughed at the end of July

Sometimes it looks like the debate is between "extend the furlough scheme" vs "we can't subsidise zombie jobs". That is not the choice. Instead policy should aim to maximise work that is done in hardest hit sectors as their output is temporarily lower until next year. How?

A part time working scheme (ie you return to work for half your previous hours and govt pays some of your lost wages for the other half) would help share out the reduced work in these sectors = smaller unemployment rise

Should be accompanied by a wage subsidy for the hours people do work in hard hit sectors (ie govt pays 10% of restaurants wage bills) because tackling covid = ⬆️costs of doing business. We need to make labour cheaper so that for any given revenue hit we get lower redundancies

Lots of nonsense talked about it being impossible to target help to hardest hit firms. Either 1) focus on certain sectors (restrictions are now sector specific - if we can target them we can target the help) 2) achieve the same objective by using a covid-related revenue fall test

These measures would help more people keep working in hard hit sectors and reduce NOT prevent a large rise in unemployment. So we need to protect incomes = Government should reverse it's plans to cut £1000 from Universal Credit next April, when unemployment will remain high

Keeping unemployment down isnt just about fewer people moving into it - we need more moving back out of unemployment and into work. A quick look at the vacancies data (still down on pre-crisis) and tanking private sector investment should make us worried on this front...

...so the Chancellor should also be announcing direct job creation e.g in social care. Precisely because this is a 1) very uncertain 2) temporary pre-vaccine phase firms wont be able to create jobs remotely fast enough. Yes online retail will expand fast but it's not enough

Before you say "the UK's flexible labour market will see new jobs surging" remember that flows back out of unemployment into jobs didnt really get going again after the financial crash until 2014 - 6 YEARS later