The UK government has announced a wide-ranging package of financial support measures to ensure businesses can continue meeting running costs as the coronavirus outbreak hits the global economy.
In the government’s daily press conferences on the coronavirus pandemic, Chancellor Rishi Sunak stressed that government was willing to do “whatever it takes to support our economy” and called for a collective national effort to combat both the health, and economic threat that is posed. Alongside a significant expansion of schemes announced in last week’s Budget, sector specific measures were also announced for the leisure, retail and hospitality sectors. Similar economic stimuli have been announced around the world in recent days, including in France, Japan and the United States.
The largest announcement was the launch of two schemes from Monday 23rd March to deliver £330 billion (equivalent to 15% of GDP) in government backed guaranteed loans to allow businesses to have the liquidity to pay rent, salaries and suppliers in the coming months, with more money available if needed.
- For larger organisations, the Chancellor has coordinated with the Bank of England to provide low cost and easily accessible commercial paper
- For small and medium enterprises, the new Business Interruption Loan Scheme announced in the Budget would be expanded, offering a maximum loan of £5 million
- Both schemes would be provided interest-free for six months
While these schemes would not come online until next week, the Chancellor confirmed that businesses in need of immediate cash could liaise with local authorities, and that banks and lenders were understanding of the current climate and exercising greater flexibility.
Chancellor Sunak also announced a series of financial support packages specifically aimed at the retail, leisure and hospitality sectors who have bit hard-hit by advice to control coronavirus through social distancing measures.
- The business rates holiday announced in the Budget is to be extended to companies of all sizes, with local authorities to be compensated fully for the lost revenue.
- A cash grant of up to £25,000 would be made available to businesses in the sector of a rateable value less than £51,000.
- It was confirmed that government advice is sufficient for businesses to make insurance claims, should their policies have sufficient cover.
The 700,000 smallest businesses, those currently receiving Small Business Rates Relief, who were eligible for a £3,000 cash grant in last week’s Budget, would now be able to access grants of £10,000 to see them through any difficulties.
Further financial support for the struggling airline sector is also being made available to combat the impact of coronavirus, however discussions are ongoing with the Department of Transport as to what form this will take. Rishi Sunak also outlined that possible regulatory forbearance could be announced for further sectors if there was a need.
The Treasury also confirmed that proposed changes to IR35 off-payroll working regulations would be delayed for 12 months as a result of the coronavirus outbreak.
Also announced was confirmation that banks would offer 3-month mortgage holidays to homeowners whose income has been affected by the virus, with support for renters still to be finalised.
An expansion of employment support measures are also in the pipeline with discussions with businesses and trade unions underway, however the government hope that the announced measures will allow businesses to continue to meet staffing costs and keep jobs open until the end of the crisis to allow the economy to bounce back.