Rishi Sunak extended the vacation program until March today, amid renewed bans and demands from Nicola Sturgeon.
The Chancellor admitted that the recovery had "slowed down" and that companies were now exposed to increased "uncertainty" in a statement to the Commons.
Employees can take 80 percent of their usual wages off until the end of March, with employers only having to pay social security and pension costs.
But he said the job retention bonus will be removed for companies that employ employees.
The move – which could add billions more to national debt – comes after complaints from the decentralized government that the agreements were extended this month when England was locked – but it was not available to them for their own action.
Mr Sunak insisted that the "aggressive" support was only possible because of the strength of the UK.
"The bank's outlook this morning shows that economic activity will be supported by our significant fiscal and monetary policies," he said.
& # 39; And the IMF just last week described the UK's economic plan as aggressive, unprecedented, successful in tackling unemployment and business failure and as one of the best examples of coordinated action in the world.
"Our top priority remains the same: protecting jobs and livelihoods."
It comes as the Bank of England pumped an additional £ 150 billion into the economy at the start of today's lockdown, fearing that GDP could fall and destroy jobs.
The bank has increased its mammoth bond purchase program to £ 895 billion and warns that UK plc's recovery is "weakening" before the squeeze was announced on Saturday. Interest rates will be kept at a record low of 0.1 percent.
The economy is expected to shrink 2 percent between October and December, but the Monetary Policy Committee says the UK is likely to dodge a double recession.
Rishi Sunak presented the government's Business Support Package to the Commons
Rishi Sunak informed the Treasury Select Committee in a letter that the new lockdown would have "significant additional effects" on the economy
An 11 percent decline in GDP this year would be the worst in 300 years – and dwarf the downturn triggered by World War I and the Spanish flu
Real GDP is expected to be 11 percent lower this year
Around 32 percent of the accommodation and catering companies had little or no confidence that their companies would survive the next three months
A third of the hotel and food companies go bankrupt
A third of the lodging and catering companies had “little or no” confidence that they would survive until the end of the year – even before the national lockdown was declared.
The alarming results came from the latest official survey on the impact of the coronavirus pandemic on the economy and society.
A multitude of hotel companies are facing disaster after Boris Johnson put months of pressure in England starting today to control a surge in infections.
However, according to the Bureau of National Statistics, the picture was bleak before the restrictions appeared.
The UK poll found that between October 5 and October 18, only 75 percent of lodging and catering businesses were in business, compared to 85 percent across all industries.
Mr Sunak has been asked to release Treasury Department forecasts on the potential economic impact of the new lockdown.
In a letter responding to a Treasury Select Committee request for an impact assessment, Sunak said that while recent restrictions will have an impact, it is likely to be different from what it was after the spring lockdown.
In a letter to the committee's Tory chairman Mel Stride, Sunak said schools will remain open this time around and companies are better prepared to work from home.
But it signaled that the new lockdown will create more misery in the UK job market and on battered corporate balance sheets.
He said: “The other restrictions announced by the government will have a significant additional impact on the economy and society.
"However, government policies are inconsistent with previous national restrictions, nor with the environment in which those restrictions take effect."
Real GDP is expected to be 11 percent lower this year, worse than the 9.5 percent proposed in August. The bank's central expectation is that the economy will not return to its level from last year until early 2022.
According to the MPC, unemployment will peak at 7.75 percent in the second quarter of next year. The government bailouts have pushed back the worst effects of the 7.5 percent high the bank had expected this quarter. The current rate is 4.5 percent, which suggests another million people will lose their jobs.
According to the report, 5.5 million people are expected to take vacation this month – 2.5 million need the support programs until April.
Speaking at a press conference following the announcement of the move, the bank's governor Andrew Bailey said, "We are here to do all we can to help the people of this country – and we will and will do it quickly."
The pound rose 0.3 percent to $ 1.30 as markets digested the larger than expected quantitative easing hike – essentially printing money to buy government bonds.
The central expectation of the bank is that the economy will not reach its level again from last year until early 2022
The MPC said unemployment will peak at around 7.75 percent in the second quarter of next year – with government bailouts to reverse the worst effects of the 7.5 percent high the bank expected this quarter
The bank's numbers suggest the UK will be harder hit than the US and the euro zone this year
Construction growth slows down in the warning sign
UK construction industry growth slowed in October to its lowest level in five months. This was another red flag for the economy.
The closely monitored IHS Markit / CIPS Construction Purchasing Managers (PMI) index hit 53.1 last month, up from 56.8 in September.
Any level above 50 means an expansion of business.
The numbers suggest that the pent-up demand may have been used up.
Tim Moore, director of economics at IHS Markit who compiles the survey, said: & # 39; The construction sector was a bright spot in an otherwise dismal month for the UK economy in October.
"Another sharp spike in residential construction helped keep the construction recovery on track, albeit at a slower pace than in Q3 2020."
"The rate of Covid infections has risen rapidly since the last meeting of the committee," read the latest MPC minutes.
"The UK government and decentralized administrations have responded by tightening the severity of the Covid restrictions."
It went on: “There is evidence that consumer spending has declined on a number of high-frequency indicators while investment intent has remained weak.
The bank said its rulings assume developments related to Covid will weigh more heavily on short-term spending than projected in the August report, leading to a drop in GDP in the fourth quarter of 2020.
The effects will also be felt in the next year. For 2021, growth of 7.25 percent is expected – below the 9 percent previously expected.
However, the MPC performed better the following year as the crisis dissipates.
The bank said the unemployment rate would peak at 7.75 percent, up from 7.5 percent in its August projections, with the government increasing only marginally thanks to efforts by the government to extend the vacation benefit system.
The bank's quarterly monetary policy report shows the economy will plunge 11 percent below pre-Covid levels in the fourth quarter as non-essential businesses and many companies are forced to close during the one-month lockup period.
Post-Brexit trade disruptions will also cost around 1 percent of GDP in the first quarter of next year as the bank predicts that small businesses are not adequately prepared.
Speaking of the recent big cash injection, Bailey said, “We believe it makes sense to act quickly and decisively to support the economy and avoid the risk of short-term disruption. & # 39;
He said the bank's work on negative interest rates will continue after failing to take the unprecedented measures today.
The bank (pictured) has increased its mammoth bond purchase program to £ 895 billion
(tagsToTranslate) Dailymail (t) News (t) Downing Street (t) Bank of England (t) News and updates from the UK Government on the UK Cabinet (t) Coronavirus Lockdowns (t) Economy in Great Britain (t) Rishi Sunak