Bonds News

BoE's Bailey backs decision to close furlough scheme in October

LONDON, Aug 6 (Reuters) - Bank of England Governor Andrew Bailey on Thursday backed the government’s decision to close its furlough scheme - which has supported 9.6 million jobs through the COVID-19 pandemic - at the end of October.

With redundancies already mounting, opposition politicians and some major think tanks have said finance minister Rishi Sunak should extend the Coronavirus Job Retention Scheme until the economy is strong enough to support more at-risk workers.

Sunak has said there is no question of a wholesale extension of the programme.

“I think the Chancellor has set out a very clear path for that, and I think it is good that he set out a very clear path. It’s been a very successful scheme,” Bailey told BBC News.

“But he’s right to say we have to we have to look forwards now and move forward.”

Last month Sunak said calls for an endless extension to the furlough programme were “irresponsible” and brought in a scheme to pay employers 1,000 pounds ($1,317) for each worker they retain following furlough.

The BoE said it estimated 7.5 million workers had benefited from the furlough scheme at its peak, and that 4 million had now returned to work, while 3.5 million were still on furlough.

But major British companies have already announced tens of thousands of redundancies.

Bailey said some long-term changes in Britain’s economy and job market were unavoidable, and that it would be wrong to stand in the way of this.

“If that is what’s going to happen, then we have to facilitate it,” he added.

Earlier, Bailey told reporters that the BoE’s projection for an unemployment rate of 7.5% this year was a “very bad story” for the British public, and warned that it could turn out worse than that.

“I don’t think (we should be) locking the economy down in a state that it pre-existed in, when we may have to look at some elements of structural change in the economy to respond to the world we now live in. You have to look forward,” Bailey told the BBC. ($1 = 0.7595 pounds) (Reporting by Andy Bruce, editing by David Milliken)