Chancellor Rishi Sunak reveals new action as he says the UK has “never, in peacetime, faced an economic fight like this one”.
The support needed was “on a scale unimaginable only a few weeks ago”, Sunak said: “This is not a time for ideology and orthodoxy, this is a time to be bold – a time for courage.”
The chancellor Rishi Sunak has announced a £350bn package of loans and grants to help Britain cope with the lockdown of large parts of the economy, as he warned the country was facing a threat to its prosperity unmatched in peacetime.
It includes £330bn in loans, £20bn in other aid, a business rates holiday, and grants for retailers and pubs. Help for airlines is also being considered.
Less than a week after pledging £12bn in his budget to soften the impact of the Covid-19 pandemic, the chancellor admitted that the measures were insufficient to tackle the savage blow to growth and stressed he would do “whatever it takes” to see the UK through the crisis.
“The coronavirus pandemic is a public health emergency. But it is also an economic emergency. We have never, in peacetime, faced an economic fight like this one. But we are well prepared. We will get through this,” he said.
He was speaking alongside Boris Johnson at the daily Downing Street press conference, 24 hours after “social distancing” measures were announced, which call on the public to stay away from pubs, restaurants and mass events.
The chancellor said the government would provide £330bn of loan guarantees – with more available if needed – to help businesses pay their bills during the crisis and top up the £12bn budget stimulus with a further £20bn of spending.
Sunak said that every business in the hard-hit retail, leisure and hospitality sector would have a year-long holiday from paying business rates, with smaller companies also eligible for a cash grant of up to £25,000.
On a day on which one analyst predicted the economy would shrink by 15% in the second quarter of 2020, the chancellor also announced cash grants of £10,000 for the UK’s 700,000 smallest companies, and a three-month moratorium on mortgage payments for home owners in difficulty as a result of the coronavirus.
The measures outlined by the Chancellor include:
- A three-month mortgage holiday for homeowners if they are suffering difficulties due to the outbreak so they will not have to pay anything “while they get back on their feet”.
- Cash grants of up to £25,000 to be available to smaller businesses in the retail, hospitality and leisure sectors with a rateable value of less than £51,000.
- The business rates holiday for smaller businesses announced in last week’s Budget will be extended to all businesses in those sectors irrespective of their rateable value.
- The new business interruption loan scheme announced at the Budget is being extended to small and medium-sized businesses, providing loans of up to £5m with no interest due for the first six months, up from £1.2m.
The package of tax cuts and grants in this financial year is worth more than £20bn.
Mr Sunak said: “Some sectors are facing particularly acute challenges. In the coming days, my colleague the Secretary of State for Transport and I will discuss a potential support package specifically for airlines and airports.”
The chancellor said he was extending the business rates holiday to all firms in the hospitality sector and funding grants of between £10,000 and £25,000 for small businesses. And Mr Sunak said that for those in financial difficulty due to coronavirus, mortgage lenders will offer a three-month mortgage holiday.
BBC personal finance correspondent Simon Gompertz said it was important for borrowers to remember that they would have to make up the payments at a later date.
“The result is that you have some breathing space but when you resume payments the amount will be adjusted to be slightly higher, because the missed interest payments have been added to the loan,” he said. “This doesn’t mean the mortgage holiday is a bad idea.”
The chancellor unveiled the measures after the government’s chief scientific adviser said about 55,000 people in the UK now have Covid-19, as the NHS moved to cancel all non-emergency surgery and 71 people are now known to have died.