Coronavirus and Financial support

In last week’s Budget, the Chancellor provided £30 billion of support to the economy to deal with the crisis by investing in public services, increasing support for vulnerable people and providing business with tax reliefs and loans.

I think we were all astonished at the quantum of support and perhaps took little notice of his further comment when he promised to take further action as the situation evolved.

On 17^th March he outlined further measures to ensure that businesses have access to the funds they need. These measures included;

• support for liquidity amongst large firms, with a major new scheme being launched by the Bank of England to help them bridge Coronavirus disruption to their cash flows through loans

 

• increasing the amount businesses can borrow through the Coronavirus Business Interruption Loan Scheme from £1.2 million to £5 million, and ensuring businesses can access the first 6 months of that finance interest free, as Government will cover the first 6 months of interest payments

The new Corporate Financing Facility (CCFF) will provide funding to businesses with an up to one-year loan, to enable businesses to be supported in paying salaries, rents and suppliers, even while experiencing severe disruption to cash flows.

The Bank of England will implement the facility on behalf of the Treasury and will publish a market notice with the details of the facility tomorrow.

 

The Chancellors measures will make available an initial £330 billion of guarantees – equivalent to 15% of UK GDP. We are listening now and many commentators think this will be insufficient to arrest the damage being done to the UK and global economy.

 

As a consequence the Chancellor has provided further measures announcing new legal powers to enable the UK Government to offer whatever further financial support it thinks is necessary to support businesses.

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