Chancellor of the exchequer Rishi Sunak has announced that the government’s job retention scheme will be extended until the end of March.

Sunak has said the extended support scheme will continue to cover up to 80% of employees’ wages up to £2,500 a month, with a review of the policy scheduled for January “to decide if economic circumstances have improved enough to ask employers to contribute more”.

The chancellor said the extension of the job retention scheme, which was previously set to expire at the end of November, will “protect millions of jobs” and “give people and businesses up and down our country immense comfort over what will be a difficult winter”.

He said the government still intended to lift the national lockdown, which came into place today, on December 2.

“The government’s intention is for the new health restrictions to remain only until the start of December, but as we saw from the first lockdown the economic effects are much longer-lasting for businesses and areas than the duration of any restrictions,” said Sunak.

This extension will mean that by March next year the furlough scheme will have been in place for a full year.

As the job retention scheme has been extended Sunak said he has scrapped the job retention bonus, which incentivised businesses to keep employees on the payroll through to the end of January next year, with a new employment incentive programme to be deployed at a later date.

The government’s move to extend the furlough scheme follows a devastating week of job cuts for the retail sector, with John Lewis, Sainsbury’s and Clarks unveiling plans to axe thousands of roles.