This afternoon the Prime Minister Boris Johnson said that the UK Government needed to act like a wartime government. He urged people to follow the advice he had outlined the day before and warned that further steps to supress the spread of Coronavirus might be needed in the coming days.
The Chancellor Rishi Sunak stated that given the circumstances the government was now announcing an additional package of measures to support businesses and individuals, building upon and going beyond those announced in the Budget last week.
The Chancellor said that this was not a time for “orthodoxy” or “ideology” and that the Government was prepared to do whatever it takes. He envisaged that further measures would be announced in the coming days.
Today the Chancellor announced:
• £330bn of guaranteed loans to business, equivalent to 15% of GDP. This would be available next week and the Chancellor made it clear that if this facility was not sufficient, further loans would be considered.
• For larger firms, there will be a new “low cost, easily accessible” lending facility which the Treasury had agreed with the Bank of England
• For SME’s there would be an increase in the business interruption loan facility announced in the budget to £5m with no interest due for the next six months
• The government’s health advice and the declaration of this event as a pandemic would allow many hospitality and retail businesses to claim against their insurance for closure
• Businesses in the hospitality, leisure and retail sectors with premises with a rateable value of less than £51,000 will receive an additional cash grant of £25,000 per business
• Business rates holiday extended to all businesses in these sectors, regardless of rateable value
• An increase in the £3,000 cash grants 700,000 SME’s announced in the Budget to £10,000 today
• A package of support for airlines and airports would be announced in the coming days
• Further support for other sectors are under consideration
• Owner occupiers affected by economic impact of the Coronavirus would have up to a three month mortgage holiday
• The Government would work with trade unions and business groups in the coming days to find ways to support people’s jobs and incomes
The scale of the measures announced today, less than a week after the Budget, are extensive. They are both a reflection of the potential economic impact of the Coronavirus and the determination of the government to get ahead of the curve. The “wartime” analogy used by the Prime Minister is instructive, with this government prepared to use spending and the power of the state in a way that would usually be unthinkable for any Conservative government in peacetime.
After today’s announcement, expect to hear demands for more money targeted at specific sectors and support for the self-employed and renters in the coming days.
For further advice and support or if you have any questions, please contact Razi Rahman, Partner and Head of Political at Maitland/AMO, on email@example.com