The government will use emergency legislation to ensure that airlines and other industries that have been hit hardest by the coronavirus epidemic receive the support they need to survive.
According to the Times, ministers will use the legislation to lift restrictions on the amount of financial support that businesses can be given.
At the moment, the cap for direct support is set at $12bn, with the move to allow more substantial bailouts set to be announced tomorrow.
Yesterday chancellor Rishi Sunak confirmed that a specific package for airlines and airports would be unveiled in the coming days due to the “particularly acute” challenges that they are facing.
The spread of the coronavirus has decimated the industry, with travel bans limiting all but essential travel around the world and borders shut across Europe and North America.
Sunak’s extra measures come in addition to £330bn worth of financial assistance already pledged for the rest of the UK economy.
The UK aviation sector, many of whom had been calling for state intervention to prop up creaking carriers and abandoned airports, welcomed Sunak’s announcement.
Virgin Atlantic, who had called for £7.5bn for the industry, hailed “the unprecedented level of support”:
“The UK needs a strong, competitive airline sector providing essential customer and cargo connectivity and thousands of jobs to communities around the UK.
“With this development, airlines including Virgin Atlantic, will weather this storm and emerge in a stronger position to assist the nation’s economic recovery in the months ahead”.
State aid is limited to £12bn under the 1982 Industrial Development Act, but can be raised to £16bn in exceptional circumstances.
However, due to the unprecedented nature of the current crisis, that figure may not be enough, hence the action taken to lift the cap.
Yesterday global industry body the International Air Transport Association said that airlines worldwide might need up to $200bn in order to ride out the outbreak.
Airline shares were once again among the worst hit stocks on the FTSE today, with Easyjet falling 14 per cent.