Sunak to Extend Business Support Loans as Covid-19 Spread Worsens
Rishi Sunak to expand UK-wide Treasury business support loan scheme as ministers rush to cushion the economy in what England’s chief medical officer will call “a very wintery winter” on Monday. hard”.
Mr Sunak is expected to unveil his intention this week to extend four loan programs, which have already backed £ 53bn in business loans via government guarantees, a sign that further national support measures are needed to avert bankruptcies. widespread businesses and massive job losses.
The move to strengthen businesses comes as the government questions whether it needs to do more to counter the spread of Covid-19, including further national restrictions in England. Sadiq Khan, mayor of London, spoke to ministers on Sunday about possible new restrictions in the capital.
A spokesman for Mr Khan said the situation “is clearly getting worse” and hinted at imminent action: “The mayor wants swift action because we cannot risk delay.”
Mr Khan plans to urge workers to stay at home, undoing recent government efforts to get people to return to their offices.
The drumbeat for tighter restrictions will intensify on Monday when Chris Whitty, England’s chief medical officer, and Patrick Vallance, chief scientific adviser, give a public briefing on the latest Covid-19 data.
“The trend in the UK is going in the wrong direction,” Professor Whitty will say. “We are at a critical moment in the pandemic. We’re looking at the data to see how to handle the spread of the virus ahead of a very difficult winter spell. “
Hospitalizations in England double every eight days and the R-number – or reproduction rate – for the virus was between 1.1 and 1.4 on Friday. Scientists fear Britain is stalking France and Spain, where the virus has spread rapidly in recent weeks.
Boris Johnson, Prime Minister, says he wants to avoid a nationwide lockdown and has agreed with Mr Sunak that – for now at least – restrictions should focus on limiting social interactions rather than business closures .
Corn Matt Hancock, Secretary of Health said “we are looking at all options” and Professor Whitty is pushing for tough new national restrictions – a perhaps two week “breaker” strategy – to delay the spread of the virus.
Mr Sunak has vowed to be “creative” in finding ways to support employment until the fall and is under pressure from Labor and some Tory MPs to extend the leave scheme – or set up a replacement – when it expires on October 31.
Under plans being developed by the Treasury, business loan programs will all be extended for applications until the end of November, with banks being allowed to process loans until the end of the year. . The Treasury declined to comment.
Three of the programs were due to end this month for applications. The fourth – the “bounce back” loan program – was due to end in early November.
According to two people familiar with the talks, the extension is expected to include the Future Fund – the innovative support program which could see the government take stakes in dozens of fast-growing start-ups forced to take out convertible loans guaranteed by the State.
The Treasury has already resisted calls from business leaders for an extension of the program, a person familiar with the talks said, with officials saying they are keen to end expensive support programs as soon as possible.
The move is designed to help businesses again hit by new lockdowns, whether regionally or nationally, or forced to close again due to new curfews.
Restaurants and bars saw more than half of their business wiped out over the weekend in areas in the north that were forced to implement new restrictions, according to UKHospitality, which represents the industry.
The majority of state-guaranteed loans have been through the ‘rebound’ program – offering loans up to £ 50,000 interest-free – which has been used by over 1.1 million businesses so far. ‘now borrowing over £ 35 billion. .
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More than 60,000 businesses have borrowed £ 13.7bn using the Coronavirus Business Interruption Loan Program, which supports loans of up to £ 5m. The large-business coronavirus shutdown program – which partially guarantees loans of up to £ 200million – has helped lend £ 3.5bn.
The extension will rekindle concerns about the scale of losses the government could face, with Office for Budget Responsibility estimates that up to 40 percent of borrowers ‘bouncing back’ could default as companies struggle to repay their debts.