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

Thu, 6th Aug 2020 13:00

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
($1 = 0.7595 pounds)
(Reporting by Andy Bruce, editing by David Milliken)

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