Yahoo Finance Rishi Sunak promises 'unprecedented package' of £330bn to help businesses through coronavirus crisis
Chancellor Rishi Sunak has announced an “unprecedented package” of Government-backed loans worth £330 billion will be made available amid the coronavirus outbreak.
At a press conference on Tuesday, he stated that "never in peacetime have we faced an economic fight like this one".
Announcing new measures to help the economy, Mr Sunak said he was extending the business rates holiday to all businesses in the hospitality sector and funding grants of up to £25,000 for smaller businesses.
He also announced homeowners would get a “three-month mortgage holiday” if they are suffering difficulties due to the outbreak.
Mr Sunak said: “The Government will stand behind businesses small and large."
He added: “I can announce today an unprecedented package of Government backed and guaranteed loans to support business to get through this.
“Today I am making available an initial £330 billion of guarantees, equivalent to 15 per cent of our GDP.
“That means any business who needs access to cash to pay their rent, their salaries, suppliers or purchase stock will be able to access a Government backed loan or credit on attractive terms.
“And if demand is greater than the initial £330 billion I’m making available today, I will go further and provide as much capacity as required. I said whatever it takes, and I meant it.”
Boris Johnson has said the Government will do “whatever it takes” to support the economy through the coronavirus outbreak.
“We must act like a wartime government and do whatever it takes to support our economy,” he told a Downing Street press conference.
“We support millions of businesses and tens of millions families and individuals through coming months.
“The Government must and will act with a profound sense of urgency.”
Mr Sunak explained that financial help will be delivered through two main schemes.
To support liquidity amongst larger firms a new lending facility with the Governor of the Bank of England will "provide low cost, easily accessible commercial paper".
To support lending to small and medium-sized businesses the business interruption loan scheme will be extended to provide "£5 million with no interest due for the first six months".
“Both of these schemes will be up and running by the start of next week," he added.
Mr Sunak also said that he is also taking “a new legal power” to “offer whatever further financial support I decide is necessary”.
He will provide cash grants of up to £25,000 to smaller businesses in the retail, hospitality and leisure sectors with a rateable value less than £51,000.
The Chancellor will also be extending a business rates holiday for those smaller businesses to all businesses in those sectors irrespective of their rateable value.
He revealed homeowners will get a “three-month mortgage holiday” if they are suffering difficulties due to the outbreak and added: “For those in difficulty due to coronavirus, mortgage lenders will now offer a three-month mortgage holiday so that people will not have to pay a penny towards their mortgage cost while they get back on their feet.”
"In the coming days I will go much further to support people’s financial security.
“In particular, I will work with trade unions and business groups to urgently develop new forms of employment support to help protect people’s jobs and their incomes through this period.”
Asked if individuals and businesses would lose out while the Government put the finishing touches on support measures, Mr Johnson said: “Be in no doubt that the state is asking people to do something, to make very considerable changes to their lives, and it is only right therefore that the state should stand behind people as they make those changes.
“And that’s what a government, that’s what a society is there to do.
“It’s there to look after people through thick and thin and to make sure that we get through this together and that’s what we’re going to do.”
Mr Johnson said the Government action represented a “huge package of support” for businesses.
“It comes in form of standing behind companies’ obligations and behind their debts on a huge scale, and also making sure they have the cashflow that they need,” he said.
“This is a quite extraordinary effort to put liquidity into the economy at a difficult time.
“Be in no doubt: one day the UK economy is going to bounce back and those good, brilliant British companies will bounce back, and that is why we are taking the steps to protect them that we are today.”
The prime minister also confirmed that insurers will pay out to businesses regardless of the fact that they have not been ordered to close.
Asked if the UK is heading for a recession, Mr Sunak said: “This will have a significant impact on our economy – that’s what I said last week, I stand by that.
day by day
“But I also stand by what else I said is – you know, this will be temporary, we will get through this and we will get through it together, and the steps that we’re taking mean that we will emerge together on the other side able to rebound back to confidence and economic activity.
“That’s why all the interventions we’re looking at are designed to provide that bridge through this – what will be a very difficult, challenging period – but get us through this period and so that we can be there on the other side to emerge stronger thereafter.”
Asked if the UK is heading for a recession, Mr Sunak said: “This will have a significant impact on our economy – that’s what I said last week, I stand by that.
“But I also stand by what else I said is – you know, this will be temporary, we will get through this and we will get through it together, and the steps that we’re taking mean that we will emerge together on the other side able to rebound back to confidence and economic activity.
“That’s why all the interventions we’re looking at are designed to provide that bridge through this – what will be a very difficult, challenging period – but get us through this period and so that we can be there on the other side to emerge stronger thereafter.”
The Government's announcement received mixed reactions from other politicians.
Liberal Democrats leadership candidate Layla Moran tweeted: “Listening to the Chancellor. Welcome help for businesses and people who own homes, but there is one massive question: what about renters?
“People who rent aren’t as financially stable. There will be disappointment for many here especially the low paid and the young.”
Listening to the Chancellor. Welcome help for businesses and people who own homes, but there is one massive question: what about renters? People who rent aren’t as financially stable. There will be disappointment for many here especially the low paid and the young.
— Layla Moran 🔶 (@LaylaMoran)
Former Labour leader Ed Miliband tweeted: “As the Chancellor says, his statement doesn’t address how we prevent workers being laid off because the business is no longer open. It is very helpful that he says he will take action on this but redundancies will happen in real time. This needs to be done very swiftly.”
After Mr Sunak announced measures to support struggling homeowners, Labour MP Jess Phillips tweeted: “Need protection for renters, how will mortgage payment holidays be passed on? Need a break on eviction surely.”
While Labour leadership candidate Lisa Nandy tweeted: “Where is the protection for renters & the low paid? No more delay: statutory sick pay must be massively increased. Cuts to benefits must be reversed, evictions must be banned, we must use systems we already have to get money to people & give them the security they need – fast.”
As the Chancellor says, his statement doesn’t address how we prevent workers being laid off because the business is no longer open. It is very helpful that he says he will take action on this but redundancies will happen in real time. This needs to be done very swiftly. https://t.co/D2NBtb2NVi
— Ed Miliband (@Ed_Miliband)
Shadow chancellor John McDonnell has said the Government measures to support the economy through the coronavirus outbreak did not go far enough.
“People are being laid off today and losing their incomes. We are disappointed that this package does not address their concerns,” he said.
Where is the protection for renters & the low paid? No more delay: statutory sick pay must be massively increased. Cuts to benefits must be reversed, evictions must be banned, we must use systems we already have to get money to people & give them the security they need – fast
— Lisa Nandy (@lisanandy)
“The further announcements laid out by the Chancellor lack the certainty required amidst growing public anxiety, and still do not go far enough in protecting workers, renters and those who are losing their jobs, or in fully supporting businesses at the scale necessary.
“In particular, the Chancellor’s claim that new forms of employment support will be developed does not appreciate the urgency and gravity of the situation.
Need protection for renters, how will mortgage payment holidays be passed on? Need a break on eviction surely
— Jess Phillips MP (@jessphillips)
“Workers and businesses need to know now that they will be supported, not in a few days’ time.”
The press conference was held as 1,950 tested positive for coronavirus in the UK, although the Government warn that as many as 55,000 people could be infected.
There were 14 more fatal cases announced on Tuesday taking the death toll to 71.
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