UPDATE 3-Britain reviews distancing rule for next stage of easing lockdown

* UK looking at changes to 2-metre social distance rule

* Travel quarantine changes under consideration

* Hospitality sector might reopen in early July

* Too early to cut VAT tax
(Releads, adds quotes from PM Johnson)

By Paul Sandle and William Schomberg

LONDON, June 14 (Reuters) - Britain is reviewing its
two-metre social distancing rule ahead of the next stage of
lockdown easing planned for July 4, when bars, restaurants and
hairdressers could reopen in England, Prime Minister Boris
Johnson said on Sunday.

Progress in tackling the coronavirus pandemic had created
"room for manoeuvre" on the rule, which many employers have said
will make it harder to get back up to speed, Johnson said at an
east London shopping centre preparing to reopen next week.

Britain has reported the third highest number of coronavirus
deaths after the United States and Brazil, something critics of
the government say reflects its response to the crisis.

Johnson's Conservative Party government, which says it has
followed scientific advice in its handling of the pandemic,
faces the difficult balancing act of reviving the economy
without allowing a second wave of cases.

"We'll work closely with the scientists at all times and
make the right decision on the basis of safety, health and
stopping the disease," Johnson said.

The scale of Britain's slump was laid bare by data last week
which showed output shrank by 25% over March and April.

As COVID-19 in the population fell to 1 in 1,600 or lower,
the chances of catching the disease from an encounter of less
than two metres had diminished, Johnson added.

"You start to build some more margin for manoeuvre," he
said. "So we'll be keeping it under review for July 4th."

Finance Minister Rishi Sunak earlier told Sky News the
review would involve economists as well as scientists so it
could be looked at "in the round".

Lowering the distance people have to maintain from one
another could provide an immediate benefit for badly-hit English
pubs, with Sunak saying three quarters could reopen, rather than
about one third with a two-metre rule.

Airlines have also warned of huge job losses because of the
quarantine policy Britain introduced last week.

Sunak said the government could make changes to the 14-day
quarantine for people coming into the country, such as the
introduction of travel corridors with specific countries.

"The transport secretary is actively looking at options as
we continue to make progress against the virus. We might be able
to do more here as well," Sunak said.

Asked if he might cut value-added tax to spur spending,
Sunak said it was something Britain had done previously.

"Before we have that conversation we need to actually reopen
those sectors. There's no point in cutting VAT on a sector that
is actually closed," he said.
(Reporting by William Schomberg and Paul Sandle
Editing by Alexander Smith)