Monday 25 May 2020 9:22 am

Project Birch: Government prepares rescue plan for largest British firms

The Treasury has indicated it is prepared to rescue large British firms severely hit by the coronavirus crisis under its “Project Birch” bailout plan.

It follows indications that a number of big British companies are seeking government aid to navigate through the crisis.

Read more: Treasury mulling plans for ‘bad bank’ to manage stakes in bailed-out firms

These include Jaguar Rover, which is reportedly in talks with the government to secure a loan of more than £1bn.

The Treasury revealed to the Financial Times the principles under which the government could rescue companies, saying it would act to save the firms whose failure would “disproportionately harm the economy”.

The government has already instituted a number of plans to help companies weather the pandemic. These include loan programmes, notably the Coronavirus Business Interruption Loan Scheme (CBILS) and bounce back loans.

The job retention scheme also sees the government pay 80 per cent of furloughed employees’ wages.

Under Project Birch, the chancellor will increase the capacity of the Treasury to handle bespoke bailouts of “viable companies which have exhausted all options,” including the government’s existing loan schemes, according to the FT.

It could include buying a stake in the company but is more likely to involve bespoke loans.

Read more: Aviation chiefs plead for more help from government amid coronavirus chaos

The sectors most at risk are aviation, aerospace and steel firms. Over the weekend, Sky News reported that Britain’s biggest steel producer, Tata Steel, had approached the Welsh and Uk governments for financial help.

Stephen Kinnock MP said Tata Steel, which owns the steelworks in Port Talbot, needs around £500m in order to survive the coronavirus crisis.

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