Never miss another update
UK Chancellor of the Exchequer Rishi Sunak has unveiled a £350bn package of financial measures aimed at shoring up the economy against the impact of the coronavirus. The package includes a loan tranche of £330bn, £20bn in other financial aid, grants for the retail and hospitality sectors as well as postponements for payment of business rates.
An additional package is under consideration for one of the hardest-hit sectors, airlines, with many of the operators already announcing staff cuts and lay-offs.
The U.K. economy is already feeling the economic punch with companies across the board warning of their long-term survival, as the government took unprecedented measures to combat the further spread of the virus.
The United Kingdom came in for sharp criticism for the delay in enacting any measure to fight the coronavirus pandemic but in the light of the rising death-toll (over 70 at the time of writing).
Chief scientific adviser to the U.K. government Sir Patrick Vallance said it would be “good outcome” for the U.K. if the number of deaths from the virus could be kept below 20,000.”
Addressing the potential impact of the coronavirus, Chancellor Sunak had this to say.
“This is an economic emergency. Never in peacetime have we faced an economic fight like this one.”
“This is not a time for ideology and orthodoxy; this is 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.”
During the same press conference, Prime Minister Boris Johnson added: “we must do whatever it takes to support the economy.” He went on to say: “This a time to be bold, to have courage. We will support jobs; we will support incomes; we will support businesses… We will do whatever it takes.”
The £330bn package represents 15% of the value of the economy, a significant fraction of the U.K.’s GDP, given the inevitable contraction from self-isolation and reduced consumer spending on anything apart from the essentials, itself an inevitable result from lay-offs and more distance work.
Mr. Sunak said he would be extending the business rates holiday to all companies in the hospitality sector, and small businesses would be eligible for funding grants of between £10,000 and £25,000. For households facing financial difficulties as a result of the virus, mortgage lenders will extend three-month sabbaticals on mortgage payments.
Borrowers will have to keep in mind future payments will be higher as a result of missed interest payments, but the measure will be a very welcome helping hand.
The package isn’t a bailout; it’s a move described as a bridge the government cannot afford not to build. The U.K. is already in unknown territory with Brexit, and coronavirus is affecting all sectors across the board.
The details of the package remain to be clarified in full, but the Chancellor’s announcement was very welcome news.