The furlough scheme has been extended until the end of April 2021 with the government continuing to contribute 80% towards wages.
Mr Sunak also confirmed he would be extending the government-guaranteed Covid-19 business loan schemes until the end of March.
These changes come in the run-up to the next Budget, which the chancellor confirmed would take place on 3 March 2021.
Chancellor of the Exchequer Rishi Sunak said:
“Our package of support for businesses and workers continues to be one of the most generous and effective in the world – helping our economy to recover and protecting livelihoods across the country.
“We know the premium businesses place on certainty, so it is right that we enable businesses to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support, as well as implementing our Plan for Jobs.”
Business Secretary, Alok Sharma, said:
“While our loan schemes have provided a vital lifeline to millions of firms across the country, we know that business owners need additional certainty as we head into the New Year.
“Extending government-backed loan schemes will give companies right across the UK the finance they need to support, protect and create jobs as we build back better from the pandemic.”
So far, the furlough scheme has supported 9.6 million jobs across the UK, with more than one million businesses using it.
Businesses will also be given until the end of March to access the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, and the Coronavirus Large Business Interruption Loan Scheme. These had been due to close at the end of January.
The schemes have already provided over £68 billion in guaranteed loans, and helped to keep afloat business in all sectors of the UK economy who have been impacted by coronavirus.