The House of Commons Treasury Committee (Treasury Committee) has published its second report, ‘Economic impact of coronavirus: the challenges of recovery’ which focuses on the medium-term issues that have arisen as the UK has sought to emerge from lockdown.

The report follows on from the first phase of the review, ‘Economic impact of coronavirus: Gaps in support’ which focused on the gaps in the government’s key support schemes, the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS).

The Treasury Committee has expressed its disappointment at the unwillingness of the Chancellor to implement the recommendations from the first phase of its review and hopes for a positive response to this one.

The report focuses on three medium-term issues: recovery of consumption, avoiding long-term unemployment and corporate debt. The overall approach by the government is also considered together with potential long-term challenges.

There was uncertainty about whether another Budget would be announced before the end of the year. As a result, many of the Treasury Committee’s recommendations specify timing of “by the next fiscal event” to include the possibility of a mini-Spending Round in the Autumn instead of another Budget.

Recovery of consumption

Following the end of the Eat Out to Help Out Scheme, the Treasury Committee recommends that the Chancellor consider whether additional measures need to be introduced to encourage consumer spending.

Avoiding long-term unemployment

The Treasury Committee recommends that:

Corporate debt

The Treasury Committee recommends that the government outlines a plan to address corporate debt which considers a wide range of potential interventions such as student loan type structures for SMEs, where repayments are conditional on the SME business reaching a certain level of financial health.

Potential long-term issues and government approach

The Treasury Committee recommends that:

Links

COVID-19: Interim report on economic impact of Coronavirus
The House of Commons Treasury Committee (Treasury Committee) has published its interim report, ‘Economic impact of coronavirus: Gaps in support’, as part of its inquiry into the economic impact of Coronavirus.

Kickstart Scheme open for applications
The government’s ‘Kickstart’ job creation scheme aims to help young unemployed people. It is now open for applications. 

COVID-19: Coronavirus Job Retention Scheme
Coronavirus Job Retention Scheme: a cash grant that is designed to allow employers to retain staff who would otherwise be laid off.

COVID-19: Self-Employment Income Support Scheme (SEISS)
COVID-19 Self-Employment Income Support Scheme (SEISS). HMRC's claims portal for the second grant opens in August 2020. 

External link

Economic impact of coronavirus: the challenges of recovery