British chancellor Rishi Sunak on Tuesday announced state loan guarantees worth £330 billion (€363 billion) along with a further £20 billion of financial handouts to help struggling businesses cope with the economic catastrophe caused by the rapid spread of coronavirus in the UK.
The UK chancellor said the rescue package – which comes on top of £7 billion in financial support for businesses announced in last week’s budget – included a one-year break from business rates as well as government grants of up to £25,000 for struggling retailers and pubs.
He also announced that banks had agreed to give struggling customers a mortgage holiday of up to three months.
Challenge
Speaking at a press conference alongside prime minister Boris Johnson, Mr Sunak said governments had never faced such a severe economic challenge during peace time.
The government would do whatever it took to protect companies and incomes, he said, adding that this would be “on a scale unimaginable only a few weeks ago”. He said it was not a time for economic “orthodoxy” and that it was “a time to be bold, a time for courage”.
“I want to reassure every British citizen, this government will give you all the tools you need to get through this,” he added.
The government has been under pressure to take further action to support its economy after Emmanuel Macron, the French president, vowed to spend up to €300 billion to prevent the failure of companies in France.
Ministers had rapidly realised that the £7 billion of targeted economic policies in last week’s budget looked insufficient to tackle the unfolding crisis.
Industries calling for bailouts or government assistance include airlines, train companies, retailers, pubs and restaurants.
Mr Sunak said the government had agreed a new lending facility with the Bank of England to provide “low-cost, easily accessible commercial paper” to support lending by banks. The government will also extend its existing business interruption scheme.
Impact
The chancellor said he realised that many companies did not have sufficient insurance to cover the impact of the pandemic. They would be allowed access to cash grants of up to £25,000 per company “to help bridge through this period” as well as a business rates holiday for companies of any size.
Mr Sunak also said ministers were working on further interventions in the coming days, including some form of support for workers who suddenly suffered a loss of income because of the pandemic.
The chancellor said this would involve “new forms of employment support to help protect people’s jobs and incomes through this period”, although the details have not been finalised.
“I promised to do whatever it takes to support our economy through this crisis, and, if the situation changed, I would not hesitate to take further action. That is what I want to begin doing today,” he added.
Intervention
Mr Johnson said more government intervention could happen within days.
Adam Marshall, chief executive of the British Chambers of Commerce, told the BBC that companies needed advice on how to get their hands on the new state grants at a time when “cash is king”.
“I think businesses are going to welcome the scale of the package that was put forward by the chancellor today but what’s going to be hugely important . . . is that cash actually gets to the front line and gets there quickly,” Mr Marshall said. “Many businesses are having to take difficult decisions not weeks from now but right away . . . getting the details right will be hugely important.” – Copyright The Financial Times Limited 2020
