One of the more detailed assessments of the package came from David Page, head of macro research at

Jobs Support Scheme
"This is modelled on the short-time work schemes used more broadly across the continent. It will be active for six months from November, as the current furlough scheme ends and it will provide subsidies to firms to top-up workers’ wages to two-thirds of their level, so long as they work – and are paid normally – for a minimum of one-third their usual amount. The scheme will apply to all SMEs but only to large firms that have seen a material fall in turnover. Firms do not need to have been part of the furlough scheme to take part. Firms can claim for both the new scheme and the Jobs Retention Bonus at the same time. The scheme will also be extended to the self-employed.

Extending the terms of previous borrowing arrangements
The Chancellor is introducing a “pay as you grow” allowance to its £38 billion Bounce Back Loans agreement, extending loan repayments to 10 years from six years, it will also allow for interest-only payments and for those in real trouble allow a six-month holiday. The CBILS loans will also see an extended loan guarantee up to 10 years. Both schemes will be open until the end of this year.

Extend the deferral of VAT payments
This will be extended from the end of March 2021, across the whole of next year over 11 smaller installments.

Extended VAT cut to the hospitality and tourism sector
The cut to 5 per cent (from 20 per cent) will be extended until the end of March from 13 January.

The impact of all these measures to ease cash flow concerns for business, with the extension of payments for loans and VAT deferrals, will be vital in what looks set to be a tight period for many businesses. Moreover, the deferral of the VAT rate cut date will also push back something that could have added further headwinds to the ailing hospitality and tourism sector. However, we think the most significant policy will be the Jobs Support Scheme. This subsidisation of employment in vulnerable sectors should reduce the number of people who are likely to lose their jobs over the coming months as the furlough scheme ends. However, with the new scheme purposefully not trying to support all previous jobs, we are still likely to see a material increase in the unemployment rate over the coming months.

The cost of these measures is as yet unknown. The real cost of the extension to loan repayments and VAT deferrals is likely to be small, not least as these extensions should increase the chances of ultimately receiving these repayments.

Also the extension of the VAT cut to the hospitality and tourism sectors is also likely to be relatively small, we estimate at just over £1 billion. But the Jobs Support Scheme is again likely to be the most significant and, while this should fall short of the estimated £75 billion cost of the furlough scheme, including the self-employed component, it could still prove significant.

Friday sees the release of August’s public sector finances, which are expected to take the total borrowing this financial year to nearly £200 billion (9.4 per cent of GDP), with the total government debt rising above £2 trillion (94 per cent of GDP).

While we expect the pace of the deficit increase to slow over the coming months, the outlook for the financial year total remains eye-watering.

In all, these measures will help mitigate some of the renewed headwinds to UK activity outlook, although after a buoyant summer we expect a much slower pace of growth across the fourth quarter. The Chancellor has scrapped his Autumn Budget. We continue to believe that the next Budget will see the Chancellor provide additional fiscal support; we will hope that he can focus on longer-term growth drivers by this time, as opposed to ongoing short-term support. However, financial markets appeared underwhelmed by today’s statement, 2-year gilt yields were 1bp lower at -0.06 per cent and 10-year yields fell 2bps to 0.20 per cent. Sterling also fell by 0.25 per cent on the announcement against both the euro and the US dollar.
 
Matthew Cady, Investment Strategist at (parent of Brown Shipley)
“The measures announced by the Chancellor are supportive for workers and businesses across the UK. They mitigate the risk of the ‘cliff edge’ many businesses would have faced if the current job retention scheme was not replaced with alternative policies.

"But many of these measures, such as the extension to the VAT cut, remain temporary to avoid weighing on the public finances to a great extent. As the virus outbreak is spreading again and containment measures are taken, activity is likely to slow in the coming months. With a vaccine break-through and better therapeutics still in development, we’ll likely need to see further fiscal support.”

Julian Jessop, economics fellow at the :
“We welcome the extension to the lower rate of VAT for the tourism and hospitality services (which was due to end in January 2021) until the end of March 2021 and also the ability to spread the payment of the VAT that was deferred between March to June 2020.

"These measures are extremely helpful for business and help prevent the “cliff edge” that had previously been created. However, January to March are relatively quiet months for the tourist and hospitality sector and many businesses in that sector will have been hoping that this could have been continued through the summer.”