British Prime Minister Boris Johnson gives a press conference about the ongoing situation with the … [+]
Topline: The British government has unveiled a £330 billion ($400 billion) package, equivalent to 15% of U.K. GDP, to bolster an economy flagging under the impact of the coronavirus pandemic with financial support for hard-hit small businesses and airlines.
- The measures will kick in from next week and will be expanded if demand exceeds the package. Here’s where it will go:
- British Chancellor Rishi Sunak promised to lend cash to any British business in need on “attractive terms”.
- Airlines and airports will receive government support. Trade body IATA recently warned that the global airline industry could lose $130 billion in revenue this year, while British Airways has warned that a number of its 3,900 pilots will lose their jobs.
- Mortgage lenders will freeze payments for three months for borrowers in financial difficulty, however critics point out that no assurances have yet been made for people who rent.
- Leisure and hospitality businesses will receive a cash grant, while all firms in the sector will be exempt from paying business rates charged on their buildings.
- Small businesses will receive an extension in business interruption loans, while larger businesses will also receive cash support.
- The package dwarves the size of the $30 billion economic stimulus pledged last week by Sunak.
Chief Critic: Bosses facing the prospect of a severe recession driven by a prolonged coronavirus lockdown may be unwilling to take up Sunak of his offer of further debt even at “attractive rates”, while the package offers nothing to those calling for government-mandated sick pay, and a break in power and gas bills, for workers also facing a cash crunch.
Crucial comment: Prime Minister Boris Johnson said in a press conference on Tuesday: “This a time to be bold, to have courage. We will support jobs, we will support incomes, we will support businesses.
“We will do whatever it takes.”
Key background: Several sectors have been particularly vulnerable to the impact of Covid-19, including bars, restaurants and airlines that, as a result of the spread of social distancing guidelines from the government, are suffering serious losses. The elderly, who are more vulnerable to the virus, have been told to self-isolate for 12 weeks, while workers have been advised by the government to work from home if they can. As of Tuesday’s press briefing, schools remain open, despite countries across Europe—including France, Italy and Spain, effectively shutting down all non-essential areas of public life.
News peg: Market volatility in recent weeks has sparked real concerns about the threat of a recession, while investors have in recent days appeared unmoved by central banks’ attempts to boost economies by cutting interest rates. Government efforts to shore up economies around the world against the worst effects of coronavirus have snowballed in recent days, with the U.S. on Tuesday announcing $850 billion in measures to protect the economy against the impact of coronavirus. France has also promised $50 billion to support companies and workers.
In numbers: The U.K. now has 1,950 confirmed cases of Covid-19, while 71 people have died. On Tuesday, chief scientific officer Patrick Vallance told a committee of lawmakers that a “good outcome” would be aiming for fewer than 20,000 deaths from the virus.
Globally, more than 180,000 people have been infected to date, while 7,100 have died.