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Thursday 26 March 2020

Government to unveil income support for the self-employed

The chancellor will lay out plans today for the government’s support package aimed at protecting self-employed workers who have been affected by the coronavirus outbreak.

The measures follow a chaotic day at the department of work and pensions when hundreds of thousands of workers struggling on zero hours contracts that have collapsed tried to call in and claim universal credit.

The government is targeting lower income workers on precarious contracts. Britain is “putting our arms around” workers during the crisis, Boris Johnson said on Wednesday.

According to the Sun, around a third of workers, 1.7 out of 5 million will benefit from income support. Only those individuals who can prove they have seen their revenues collapse. People raking in larger amounts like lawyers and tech workers, who are expected to have saved up funds over recent years will not benefit either.

The system being put in place is about “fairness”, say Treasury sources.

The Times hears the formula for calculating payments will be based on revenues and profits over the last three years, but capped at £1,700 – £800 lower than the maximum monthly payouts for salaried workers. However, in both cases, the government contribution will amount to 80% of normal incomes.

However, a great deal of today’s speculation is based on titbits from different sources. If what’s being reported in today’s press is true then the government will be letting down some of society’s most vulnerable workers, but we won’t know until Rishi Sunak speaks at around 4.00 PM.

Coronavirus testing kits to become widely available  

The government has acquired 3.5 million home-testing kits that will be made available to key workers over the coming weeks. Millions more kits will then be made available on the open market.

The director of the National Infection Service, Professor Sharon Peacock said trials of the test will be completed this week and then manufactured for mass distribution.

Boris Johnson first mentioned antibody tests a week ago, which only tell you whether you have had the virus and recovered from it. If you’ve just become infected and your body hasn’t yet developed immune defence, the test will not come up positive.

Nevertheless, the nationwide roll-out of the kits, will give analysts a much clearer idea of the spread of the disease after an Oxford University study suggested half the population might be infected, meaning the mortality rate is lower, the contagiousness of the disease is much higher.

Meanwhile, the number of deaths yesterday halved from the previous day’s toll of 87. Sadly, it’s unlikely the infection has already peaked. However, if the Oxford study is incorrect and the spread remains limited, it would appear the measures being put in place are proving effective in slowing the outbreak.

Brussels still struggling to prove we Europe needs more integration

European Union leaders will today discuss a “Marshall Plan” to combat coronavirus, but the measures will amount to thin gruel as longstanding divisions between the debt-ridden and corona crisis-hit South and the richer North resurface.

The talks to inject much need cash into the struggling Eurozone come after a meeting of finance ministers on Tuesday that yielded little succour for the likes of Italy, Spain and France, all saddled with huge national debts and rising death tolls.

Under the European Stability Pact, states’ national debt must not go higher than 60% of GDP. Italy’s debt was at 130% before the epidemic started, and their borrowing has skyrocketed since the pandemic begun.

Italy wants the European Central Bank to issue bonds on behalf of the whole Eurozone, which will benefit from lower interest rates thanks to the risk being shared with more stable countries like Germany and the Netherlands. Unsurprisingly, those countries aren’t keen.

The other solution is to mobilize the EU’s budget. “the way we are going to put in place what I call a Marshall Plan-like stimulus strategy,” said European Council President, Charles Michel on Tuesday. “And when I say Marshall Plan-like, I say with a strong ambition.”

All well and good having that ambition, but it’s of little use without the money and the will. Michel said capital should be mobilized “in the framework of the European budget”, but the current cycle ends in December. Naturally, the EU’s dodgy accounting practices allow spending to be pushed onto the next budget, however all 27 EU member states are currently locked in a stalemate over 2021-2027 spending plan, which amounts to a staggering trillion Euros.

No Money, and no will to break the deadlock because those rich Northern countries understandably refuse to pick up the tab for the shortfall caused by one of their brethren, the UK, abandoning ship. Which means the new Marshal plan will be nothing like the American-backed original and will come to nothing. 

As an alternative to Michel’s plans and the shared bonds, so-called corona-bonds, the rich countries are prepared to trigger the €400 billion ESM stability fund, a Greek-style bailout which some commentators suspect is being eyed-up as a way of sorting out Italy’s debt crisis through punishing austerity (real austerity, not Jeremy Corbyn’s interpretation).

“Every economic crisis is a cleansing. One can exploit it to emerge stronger,” said Austria’s ECB governor last week. Austria is one of the countries known to be particularly keen for Italy and the like to fall into the ESM trap.

 Coronavirus is a lesson to us all in many things, not least the folly of European integration.