LONDON: Britain said it would launch a £330 billion ($399bn) lifeline of loan guarantees and provide other help to businesses facing the risk of collapse as it ramped up its attempt to fight the economic hit from coronavirus.
“This is not a time for ideology and orthodoxy,” finance minister Rishi Sunak said yesterday, speaking alongside Prime Minister Boris Johnson. “This is a time to be bold, a time for courage.”
Sunak said he was ready to increase the size of the loan guarantees – already equivalent to 15 per cent of Britain’s annual economic output – to ensure all companies needing cash get it.
Other measures announced yesterday included extending the recent suspension of a property tax paid by small companies to all businesses in the retail, hospitality and leisure sectors.
Those companies would also get cash grants as part of a £20bn increase in direct support for companies, on top of help announced last week, and the government would discuss a support package for airlines and airports, Sunak said.
Johnson told people to avoid clubs, restaurants, cinemas and theatres, leaving many companies in those sectors facing the prospect of collapse.
The virus crisis has also had a major hit to the aviation industry.
Britain’s biggest airports including Heathrow and Gatwick have asked Johnson to be included in any support for the aviation industry, saying they face the threat of a complete shutdown without it.
Banks and lenders would offer a three-month mortgage holiday for those in difficulty, Sunak said.
“This struggle will not be overcome by a single package of measures or isolated interventions,” he said. “This national effort will be underpinned by government interventions in the economy on a scale unimaginable only a few weeks ago.”
The Bank of England said it would set up a new fund with the finance ministry to buy commercial debt of up to one-year in duration issued by companies making a “material contribution” to Britain’s economy.
It added that the fund would be financed out of the creation of central bank reserves – in other words with new money, much like the BoE’s quantitative easing programme.
Earlier yesterday, Britain’s budget forecasters said the scale of the borrowing needed to fight the coronavirus hit to the economy might resemble the country’s immense debt splurge during the Second World War.
“Now is not a time to be squeamish about public sector debt,” Robert Chote, head of the Office for Budget Responsibility, said.
On Monday, French President Emmanuel Macron said his government would guarantee 300bn euros worth of loans, and promised that no French company would be allowed to collapse.