What effect do you think the UK furlough scheme had on the hospitality market? Use a supply and demand diagram to support your answer.

The furlough scheme is officially known as the Coronavirus Job Retention Scheme and it was launched in March 2020. This scheme allows the employers to stand down the workers but then claim a cash grant of up to 80% of their wages to the government, the wage is capped at £2,500 a month. The money is claimed by the company from the government and then distributed it to the staffs, so people don't have to do anything by themselves.

Currently the government revealed that the scheme is currently paying out to around 7.5 million employees, collectively they equal to the quarter of Britain's private sector workforce. The scheme has been used by around 935,000 companies. The hospitality sector and their suppliers, also receive the same 80% salary support from this scheme until the end of October.

During lockdown, receiving a certain income will help in managing the supply and demand in the market. This income increases the demand and supply of goods and services in hospitality industries as well as in other industries as shown in given graph.As the result of this scheme, the quantity demanded increases from Q1 to Q3 and price remains same as before.

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