The government has pledged to do “whatever it takes” to support a greater number of British businesses and individuals as the coronavirus outbreak causes major economic disruption.
Chancellor Rishi Sunak said government would “stand behind businesses small and large”, pledging government-backed and guaranteed loans “to get through this”.
The loan package totalled £330bn, equivalent to 15 per cent of GDP so any business can access that “on attractive terms” in the biggest UK government rescue plan since the 2008 financial crisis.
On top of that he announced a new lending facility, extending the government’s business interruption loan scheme to provide loans of £5m, up from £1.2m, with no interest due in first six months.
A special package for airlines and airports will be thrashed out and other “specific opportunities” are also being looked at.
In terms of support for individuals, Sunak said lenders will give a three month mortgage holiday to those in need.
The chancellor added that he will urgently develop new forms of employment support working with unions.
Sunak says he will use the forthcoming coronavirus bill, which is expected to be laid before parliament later this week, to take powers to offer “whatever further financial support is necessary”.
Business rates relief expanded
The chancellor also confirmed that leisure firms such as pubs and clubs with a policy for insurance that covers pandemic would be able to claim, saying “government action is sufficient”.
For those who don’t have insurance, and additional cash grant of £25,000 “to bridge through this period” would be made available.
The business rates holiday, which last week was to be applied to firms with a rateable value of up to £51,000, will now be applied to all regardless of rateable value.
Sunak said: “People’s anxiety about the disease is matched only by their worries about their livelihoods
“We will support jobs, we will support incomes… we will do whatever it takes”.
As of today, there have been 71 coronavirus deaths in the UK, of which 67 were in England.
US moves to calm markets
The government’s move comes after US President Donald Trump unveiled sweeping measures including a pledge to buy short-term corporate debt to help ease the strain on companies.
Treasury secretary Steve Mnuchin also revealed plans to send money directly to citizens in the next fortnight. “We are looking at sending cheques to Americans immediately,” he said during a press conference this afternoon. “Many companies have now shut down, and Americans want cash now.”
A payroll tax holiday had been ruled out because it would not be quick enough, Mnuchin and Trump said.
“We want to make sure Americans get money in their pockets immediately,” Mnuchin added.
“We are going big,” Trump added. “A big infusion, as opposed to having little meetings every few days.”
Earlier today, the OBR’s chairman Roger Chote urged the government to avoid “squeamishness” about ballooning debt levels, saying ministers should use a “blunderbuss”.
Sunak’s £12bn package announced to tackle Covid-19 as part of last week’s Budget was a helpful “down-payment”, but more was needed.
“This is not the time to be squeamish about one-off additions to public sector debt. It’s more like a wartime situation – that this is money well spent.”
He added: “This is no abdication of budget responsibility to spend what you need to spend to deal with this… We ran during World War II budgets in excess of 20 per cent of GDP five years on the trot and that was right thing to do.”
“The more serious this is, the more blunderbuss you have to be in the approach,” Chote told MPs.